A. Introduction

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If an agreement between undertakings is in compliance with an block exemption regulation, parties are not required to prove the four general conditions laid down in Art. 101 para. 3 TFEU because the agreement is presumed to satisfy these conditions.Thus, block exemption regulations constitute an optional haven of security by way of a presumption of legality. If the agreement is not based on the mold of a block exemption regulation, it is not necessarily illegal since block exemption regulations do not intend to prohibit but put in a framework allowing to presume sufficient efficiency gains to offset a potential anticompetitive object or effect. The sole consequence for the agreement is the loss of the benefit of the exemption. Then, the competition authority has to report the proof of a restriction within the meaning of Article 101 para. 1 TFEU (ie an anticompetitive object or effect).

That kind of regulations has been set up because of the need to have a flexible economic law. This need come into being the first time in the United-States at the end of the XIX century during the first years of the Sherman Act’simplementation. This “rule of reason” aims to apply reasonably the prohibitions of the competition law as pratices in question are not really harmful considering that positive effects prevailing negative effects. In the EU, this flexibility comes from the individual exemption provided for by Art. 101 para. 3 and the block exemption provided for block exemption regulations.

In the EU, the first block exemption regulations are born during the 70s because the Commission was congested. The first generation of block exemption regulations, called formal approach, has been criticized because it constituted a too meticulous and strict framework : the regulations containing list of clauses white, grey and black were not fitted with the business life. It is why the Commission decided to have a new economical approach with regulations of second generationusing thresholds of market shares that enable to presume a market power. However, for the sake of a minimal legal certainty, the Commision conserved a part of formal approach with the establishment of hardore restrictionsand excluded restrictions.

B. Political reasons of the Technology Transfer Block Exemption Regulation

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Intellectual property legislation confers exclusive rights on holders of patents, copyright, design rights, registered trademarks and other rights protected by the law. A holder of intellectual property rights is authorised to prevent any unauthorised use of its intellectual property and to exploit such property, in particular by licensing it to third parties. Technology transfer agreements concern the licensing of technology.

These agreements will usually improve economic efficiency and can be considered as pro-competitive because they can reduce duplication of research and development, increase the incentive for the initial research and development, encourage incremental innovation, promote diffusion and generate product market competition. However, licensing agreements may also be used for anti-competitive purpose where two competitors use a licensing agreement to share markets between themselves or, where an important licence holder excludes competing technologies from the market.

In order to reach the right balance between the protection of competition and the protection of intellectual property rights, the Technology Transfer Block Exemption Regulation (TTBER) creates an area of legal certainty for most licensing agreements. Guidelines provide guidance on the application of the TTBER as well as on the application of Article 101 to technology transfer agreements that fall outside the scope of the TTBER.

As seen previously, this regulation is based on thresholds of market shares : market power is presumed from 20% of market shares when agreements are between competitors and from 30% between non-competitors. This regulation provides also hardcore and excluded restrictions.

C. Political reasons of the Vertical Block Exemption Regulation

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The Vertical Block Exemption Regulation is based on the same reasoning that the TTBER : on the idea that the market need to have a certain flexibility. This flexibility is sought by the EU via its will to sue collusive pratices and phenomenons of locking markets taking into account the efficiencies which are in general associated with the vertical agreements.

Vertical agreements are agreements for the sale and purchase of goods or services which are entered into between companies operating at different levels of the production or distribution chain. Distribution agreements between manufacturers and wholesalers or retailers are typical examples of vertical agreements. Vertical agreements which simply determine the price and quantity for a specific sale and purchase transaction do not normally restrict competition. However, a restriction of competition may occur if the agreement contains restraints on the supplier or the buyer, for instance an obligation on the buyer not to purchase competing brands. These vertical restraints may also have significant positive effects. They may, for instance, help a manufacturer to enter a new market, or avoid the situation whereby one distributor ‘free rides’ on the promotional efforts of another distributor, or allow a supplier to depreciate an investment made for a particular client.

The applicability of the block exemption is subjected to the non-crossing of 30% of market shares by the producer and the distributor. Moreover, this regulation contains also hardcore and excluded restriction.