Block Exemption

Under European Law (specifically Article 101 of the Treaties of Rome and Amsterdam, now the Treaty on the Functioning of the European Union (TFEU)) there is a sweeping prohibition of all agreements that might lessen commercial competition. However, Article 101(3) provides that the European Commission can “exempt” from the prohibition, activities, which, in various ways are economically beneficial and especially those that benefit consumers.

Faced with the task of exempting tens of thousands of agreements the European Commission resorted to enacting bulk exemptions of generic classes of agreements provided they met certain criteria and also set size limits below which activities would normally be too small to bother about, i.e., de minimis. The bulk exemptions are created by regulations known as “block exemptions.” Two important block exemptions for intellectual property law are the Technology Transfer Block Exemption (which in 2014 superseded the earlier Regulation 772/2004, known as the TTBER (earlier there were two separate exemptions, one for patent licenses and one for know-how)) and the R&D Agreements Block Exemption (Regulation 1217/2010). Some size criteria are also set forth in the so called ‘De Minimis Notice’.

A block exemption usually contains three lists, a white list of broadly legal clauses, provisions and classes of companies that can benefit from the exemption; a black list of clauses and provisions absolutely excluded from the exemption, which in addition, are almost always illegal; and a grey list of clauses and provisions and excluded classes of companies that may, under certain circumstances be exempted, usually on a case-by-case basis.  The block exemption system has been augmented by the publication of detailed guidelines such as the Guidelines on technology transfer agreements (which in 2014 superseded an earlier set of technology transfer guidelines), the Guidelines on Vertical Restraints, Horizontal Cooperation Agreements as well as guidelines on general issues on the application of EU competition law such as the Guidelines on effect on trade, and relevant market.

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