(1)

Regulation No 19/65/EEC empowers the Commission to apply Article 101(3) of the Treaty by regulation to certain categories of technology transfer agreements and corresponding concerted practices to which only two undertakings are party which fall within Article 101(1) of the Treaty.

(2)

Pursuant to Regulation No 19/65/EEC, the Commission has, in particular, adopted Commission Regulation (EU) No 316/2014 (2). Regulation (EU) No 316/2014 defines categories of technology transfer agreements which the Commission regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. In view of the overall positive experience with the application of Regulation (EU) No 316/2014, which expires on 30 April 2026, and the results of the evaluation of that Regulation, it is appropriate to adopt a new block exemption regulation.

(3)

This Regulation should ensure the effective protection of competition and provide adequate legal security for undertakings. The pursuit of those objectives should take account of the need to simplify administrative supervision and the legislative framework to the greatest extent possible.

(4)

Technology transfer agreements concern the licensing of technology rights. Such agreements will usually improve economic efficiency and be pro-competitive as they can reduce duplication of research and development, incentivise initial research and development, promote innovation, facilitate the dissemination of technology and generate product market competition.

(5)

The likelihood that such efficiency-enhancing and pro-competitive effects will outweigh any anti-competitive effects resulting from restrictions contained in technology transfer agreements depends on the degree of market power of the undertakings concerned and, therefore, on the extent to which those undertakings face competition from undertakings owning substitute technologies or undertakings producing substitute products.

(6)

This Regulation should only apply to technology transfer agreements between a licensor and a licensee. It should cover such agreements even if the agreement contains conditions relating to more than one level of trade, for instance requiring the licensee to set up a particular distribution system and specifying the obligations the licensee must or may impose on resellers of the products produced under the licence. However, such conditions and obligations should comply with the competition rules applicable to supply and distribution agreements, as set out in Commission Regulation (EU) 2022/720 (3) and explained in the Commission Guidelines on Vertical Restraints (4). Supply and distribution agreements concluded between a licensee and buyers of its contract products should not be exempted by this Regulation.

(7)

This Regulation should only apply to agreements where the licensor permits the licensee and/or one or more of its sub-contractors to exploit the licensed technology rights, possibly after further research and development by the licensee and/or its sub-contractors, for the purpose of producing goods or services. It should not apply to licensing in the context of research and development agreements that are covered by Commission Regulation (EU) 2023/1066 (5) or to licensing in the context of specialisation agreements that are covered by Commission Regulation (EU) 2023/1067 (6). It should also not apply to agreements whose primary purpose is the mere resale or distribution of software, whether through physical or digital channels, as such agreements do not concern the licensing of technology for the purpose of production but are more akin to distribution agreements.

(8)

This Regulation should not apply to agreements to set up technology pools, that is to say, agreements for the pooling of technologies with the purpose of licensing them to the contributors to the pool or to third parties, or to agreements whereby the pooled technologies are licensed out to those third parties. Nor should it apply to arrangements whereby potential licensees of technology agree to negotiate the terms of technology transfer agreements jointly (licensing negotiation groups).

(9)

For the application of Article 101(3) of the Treaty by regulation, it is not necessary to define those technology transfer agreements that are capable of falling within Article 101(1) of the Treaty. In the individual assessment of agreements pursuant to Article 101(1), account has to be taken of several factors, and in particular the structure and the dynamics of the relevant technology and product markets.

(10)

The benefit of the block exemption established by this Regulation should be limited to those agreements which can be assumed with sufficient certainty to satisfy the conditions of Article 101(3) of the Treaty. In order to attain the benefits and objectives of technology transfer, this Regulation should not only cover the transfer of technology as such but also other provisions contained in technology transfer agreements if, and to the extent that, those provisions are directly related to the production or sale of the contract products.

(11)

For technology transfer agreements between competitors it can be presumed that, where the combined share of the relevant markets held by the parties does not exceed 20 % and the agreements do not contain certain severely anti-competitive restrictions, they generally lead to an improvement in production or distribution and allow consumers a fair share of the resulting benefits.

(12)

For technology transfer agreements between non-competitors it can be presumed that, where the individual share of the relevant markets held by each of the parties does not exceed 30 % and the agreements do not contain certain severely anti-competitive restrictions, they generally lead to an improvement in production or distribution and allow consumers a fair share of the resulting benefits.

(13)

For the application of this Regulation, market shares on relevant technology markets should be calculated on the basis of the presence of the licensed technology rights on the relevant product and geographic markets where the contract products are sold, namely on the basis of the sales of contract products produced by the licensor and its licensees combined. Therefore, for the application of this Regulation, technologies that have not yet generated sales of contract products should be considered to hold a market share equal to zero.

(14)

The provisions of this Regulation relating to the application of market share thresholds should not affect the calculation of market shares for the assessment of agreements that do not fall within the block exemption provided for by this Regulation. The application of this Regulation is without prejudice to the application of Article 102 of the Treaty.

(15)

If the applicable market share threshold is exceeded on one or more product or technology markets, the block exemption should not apply to the agreement for the relevant markets concerned.

(16)

There can be no presumption that, above those market share thresholds, technology transfer agreements fall within the scope of Article 101(1) of the Treaty. For instance, exclusive licensing agreements between non-competing undertakings often fall outside the scope of Article 101(1). There can also be no presumption that, above those market share thresholds, technology transfer agreements falling within the scope of Article 101(1) will not satisfy the conditions of the exception laid down in Article 101(3). However, it can also not be presumed that they will usually give rise to objective advantages of such a character and size as to compensate for the disadvantages which they create for competition.

(17)

This Regulation should not exempt technology transfer agreements containing restrictions which are not indispensable to the improvement of production or distribution. In particular, technology transfer agreements containing certain severely anti-competitive restrictions, such as the fixing of prices charged to third parties, should be excluded from the benefit of the block exemption established by this Regulation, irrespective of the market shares of the undertakings concerned. Where an agreement contains such hardcore restrictions, the whole agreement should be excluded from the benefit of the block exemption.

(18)

In order to protect incentives to innovate and the appropriate application of intellectual property rights, certain restrictions should be excluded from the benefit of the block exemption. In particular certain grant back obligations and non-challenge clauses should be excluded. Where such restrictions are included in a technology transfer agreement, only the restriction in question should be excluded from the benefit of the block exemption.

(19)

The market share thresholds, the non-exemption of technology transfer agreements containing severely anti-competitive restrictions and the excluded restrictions provided for in this Regulation will normally ensure that the agreements to which the block exemption applies do not enable the participating undertakings to eliminate competition in respect of a substantial part of the products in question.

(20)

This Regulation should indicate typical situations in which it may be considered appropriate to withdraw the benefit of the exemption established by this Regulation, pursuant to Article 29 of Council Regulation (EC) No 1/2003 (7).

(21)

In order to strengthen supervision of parallel networks of technology transfer agreements which have similar restrictive effects and which cover more than 50 % of a given market, the Commission may by regulation declare this Regulation inapplicable to technology transfer agreements containing specific restrictions relating to the market concerned, thereby restoring the full application of Article 101 of the Treaty to such agreements,

(a)

the market share shall be calculated on the basis of market sales value; if market sales value data are not available, estimates based on other reliable market information, including market sales volumes, may be used to establish the market share of the undertaking concerned;

(b)

the market share shall be calculated on the basis of data relating to the preceding calendar year; if the preceding calendar year is not representative of the parties’ position in the relevant market(s), the market share shall be calculated as an average of the parties’ market shares for the 3 preceding calendar years;

(c)

the market share held by the undertakings referred to Article 1(2), second subparagraph, point (e), shall be apportioned equally to each undertaking having the rights or the powers listed in Article 1(2), second subparagraph, point (a);

(d)

the market share of a party active on a relevant technology market shall be calculated on the basis of the presence of that party’s technology rights on the relevant market(s) (namely the product market(s) and geographic market(s)) where the contract products are sold, that is, on the basis of the combined sales of that party and its licensees of products incorporating that party’s licensed technology rights;

(e)

if the market share referred to in Article 3(1) or (2) is initially not more than 20 % or 30 % respectively, but subsequently rises above those levels, the exemption provided for in Article 2 shall continue to apply for a period of three consecutive calendar years following the year in which the 20 % threshold or 30 % threshold was first exceeded.