New Technology Transfer Block Exemption, The: A Welcome Reform, After All

Innovation and Economic Growth and Competition Policy and Antitrust

Article Snapshot

Author(s)

Anu Bradford and Maurits Dolmans

Source

27 World Competition 3, 2004

Summary

This paper looks at how Europe regulates technology agreements between firms.

Policy Relevance

The EC should continue to revise its competition rules to allow more types of technology licensing.

Main Points

  • Article 81 of the European Union’s treaty on competition law bans agreements that restrict competition. This affects many ordinary contracts, so exemptions are allowed. This in turn affects how national competition authorities bring cases.

  • The Technology Transfer Block Exemption Regulation (TTBER) exempts contracts related to technology to allow licensing for manufacturing or to bring a product to market.

  • In 2004, the European Commission (EC) changed the TTBER. The TTBER now covers software copyright licensing as well as patents, but unfortunately not to other rights like trademarks.

  • The new TTBER blacklists some types of agreements, and grey-lists others. Other licenses are allowed, except for licenses between competitors with more than a combined 20 percent market share, or a 30 percent market share for non-competitors.  Market share analysis might not work well, because it looks backward to the past.

  • The EC’s new rule gives more leeway to deals between non-competitors than to those between competitors, and more leeway to reciprocal agreements, usually beneficial, than to nonreciprocal agreements.
    • Helpfully, calculating royalties based on sales figures is now allowed.
    • In future, the EC should usually allow competing firms to set maximum prices.

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