Technology Transfer Agreements – New EU and UK Competition Law Frameworks

The European Commission has adopted a new competition law framework governing technology transfer agreements, while the UK has introduced a new block exemption order and is consulting on accompanying draft guidance issued by the CMA.

• European Union. On 1 May 2026, the new Technology Transfer Block Exemption Regulation (“EU TTBER”) and accompanying Technology Transfer Guidelines (“EU TTGL”) entered into force, replacing the previous framework that expired on 30 April 2026. The new instruments follow a review launched in 2022, which found the old regime broadly fit for purpose but outdated — lacking guidance on digital economy developments and unresolved areas of legal uncertainty.
• United Kingdom. On 1 May 2026, the Competition Act 1998 (Technology Transfer Agreements Block Exemption) Order 2026 (“UK TTBEO”) entered into force, replacing the previous regime. Alongside the UK TTBEO, the CMA has launched a public consultation on draft guidance on the application of the UK TTBEO (“Draft UK TTGL”), which runs until 11 June 2026.

These safe harbors and guidance materials are of particular relevance to the life sciences sector, where technology licensing agreements and IP settlement agreements are of critical importance to companies’ success. We summarise below the key changes introduced by the new instruments.

1. Competitors and Potential Competitors — Broader EU Definition of Potential Competitor & Tightened Blocking Position Rules in Both Jurisdictions

Under the former TTBER, a licensee was considered a potential competitor if it is likely to enter the relevant product market “in response to a small and permanent increase in relative prices”. The EU TTBER broadens this definition by removing the explicit link to a price increase: a party is now a potential competitor if, absent the agreement, there would have existed “real and concrete possibilities” for it to enter the relevant market and compete within a timeframe “sufficiently short to impose competitive pressure” on incumbents.

This revised definition may affect the compliance obligations of companies involved in technology licensing. Where a counterparty qualifies as a potential competitor, the agreement is subject to the stricter 20% combined market share threshold and a more restrictive list of hardcore restrictions than those applicable to agreements between non-competitors.

By contrast, the UK TTBEO retains the price-increase-linked test. An undertaking is a potential competitor only if, on realistic grounds and not merely as a theoretical possibility, it would likely undertake the necessary investments or incur other necessary costs to enter the market in response to a small and permanent increase in relative prices, within a period sufficiently short to impose competitive pressure on existing market participants.

Businesses with cross-border licensing programmes should note that the same agreement may be classified differently under EU and UK law, with significant consequences for applicable thresholds and restrictions.

In addition, both the EU TTGL and Draft UK TTGL narrow the circumstances in which parties can rely on a blocking position to be treated as non-competitors:

• if both parties are already operating in the relevant market, a blocking position is “very unlikely” unless a final court judgment has confirmed both the validity and the infringement of the intellectual property right; and
• “particularly convincing evidence” is required where the parties have a common interest in claiming a blocking position in order to be categorised as non-competitors

2. Data Licensing – New Guidance & Extension of UK Block Exemption

Both frameworks provide new guidance on licensing agreements involving data.

The EU TTGL clarify that the EU TTBER covers data licensing only when the data constitutes know-how or a technology right, or when the licensing occurs within a technology transfer agreement and is directly related to the production or sale of the contract products. Beyond the block exemption itself, the Commission will also apply EU TTGL principles to data licensing agreements where the licensed data forms part of a database protected by copyright or by the sui generis right under Directive 96/9/EC on the legal protection of databases.

The Draft UK TTGL mirrors the EU TTGL clarification regarding the scope of the TTBEO. The UK framework nevertheless goes further: “copyright in a database” and “database right” are expressly included within the definition of “technology rights” under the UK TTBEO itself, thereby extending block exemption coverage directly to those rights rather than addressing them solely through guidance.

• where the data licensing agreement itself does not restrict competition, any ancillary exchange that is objectively necessary and proportionate to implement the agreement will likewise fall outside the prohibition on anti-competitive agreements;
• exchanges that are not objectively necessary to implement the agreement — or that are themselves the main object of the agreement — will be assessed under the applicable Horizontal Agreements Guidelines; and
• the EU TTGL go further and provide that an exchange between competitors will constitute a restriction of competition by object where it is capable of removing uncertainty regarding “the timing, extent and details of the modifications” to be adopted by the undertakings concerned in their market conduct.

3. Licensing Negotiation Groups – New EU Guidance (UK to Assess Case by Case)

The EU TTGL introduce new guidance on the competitive assessment of Licensing Negotiation Groups (“LNGs”) — arrangements whereby potential licensees jointly negotiate licence terms with technology owners. The guidance establishes a framework for the assessment of LNGs under Article 101 TFEU, recognising their potential to reduce transaction costs and promote more balanced licensing negotiations, whilst also addressing competition risks such as the exercise of excessive buyer power, downstream market coordination, and the foreclosure of competing implementers in downstream markets.

The draft EU TTGL had proposed a soft safe harbour for qualifying LNGs meeting certain conditions. However, the final TTGL abandon this soft safe harbour, citing limited enforcement experience. This reflects a more cautious approach, reinforced by recent reporting that the US Department of Justice is investigating an LNG in the automotive sector as an alleged buyer cartel — the same type of arrangement that previously received a positive comfort letter from the Commission (see VBB on Competition Law, Volume 2025, Nos. 7-8).

The Draft UK TTGL do not contain equivalent guidance. Instead, the CMA indicates that LNGs should presently be assessed on a case-by-case basis, taking into account the relevant factual and economic circumstances. The CMA also notes that, to its knowledge, LNGs are not currently operating in the UK market, but states that it may revisit its position as market practice and enforcement experience develop.

4. Technology Pools – New Criteria for Soft Safe Harbour

Technology pools allow several technology right holders to group their technology rights in a single package, which they then license to pool members and third parties. Both jurisdictions have long provided a soft safe harbour for creating and operating such pools, as well as benchmarks for case-by-case analysis where a pool falls outside it.

Under the former framework, the soft safe harbour required that:

• participation in the pool creation process is open to all technology right holders;
• sufficient safeguards are adopted to ensure that only essential technologies are included in the pool and that the exchange of sensitive information is limited to what is necessary;
• pooled technologies be licensed to the pool on a non-exclusive basis and on FRAND terms;
• both contributing parties and licensees may challenge the validity and essentiality of pooled technologies; and
• contributing parties and licensees remain free to develop competing technologies.

A technology is considered “essential” when it is indispensable to produce a particular product or carry out a particular process to which the pooled technologies relate, or if it constitutes a necessary part of the pooled technologies required to comply with the standard supported by the pool.

The new EU TTGL and Draft UK TTGL introduce three additional conditions for the soft safe harbour to apply:

• the technology rights included in the pool must be effectively disclosed to both potential and existing licensees;
• the methodology used to verify that only essential technologies form part of the pool must be effectively shared with potential licensees; and
• the pool must ensure that licensees are not charged more than once for the same technology.

5. Patent Settlements – Updated Guidance

Both the EU TTGL and the Draft UK TTGL clarify that ‘pay-for-restriction’ or ‘pay-for-delay’ settlement agreements between competitors constitute a restriction of competition by object when the transferred value clearly serves the commercial interests of the technology holder and the other parties in not competing — for example, where payments are large enough to discourage market entry or expansion.

This clarification follows a series of CJEU judgments in the pharmaceutical sector concerning pay-for-delay settlement cases, notably Generics UK, Lundbeck, and Servier.

6. Post-IP Expiry Royalty Obligations – EU Restores Legal Certainty & UK Draft Guidance Retains Qualifications

The former EU and UK TTGL provided that royalty obligations extending beyond the expiration of licensed technology rights do not, in themselves, restrict competition.

Importantly, the Commission removed two qualifications that had appeared in the draft EU TTGL and which would potentially have narrowed this principle. The deleted language had suggested that post-expiry royalties may be less problematic where:

• the licensee remained free to terminate the agreement; and
• termination would not significantly hinder the licensee’s ability to remain active on the market.

7. Withdrawal of Block Exemption – New Grounds

The EU TTGL and Draft UK TTGL expand the circumstances in which competition authorities may withdraw the benefit of the block exemption.

Withdrawal may now be appropriate where:

• customer access to the contract products is unduly limited as a result of restrictions on the ability of the licensor or licensees to make passive sales; or
• royalties in a relevant technology market are set at a supra-competitive level as a result of the cumulative effect of similar cross-licensing agreements between competing undertakings.

8. Market Share Thresholds – New Clarifications & UK Introduces Alternative Test

The EU and UK block exemptions continue to apply only where the parties to a technology transfer agreement hold market shares below specific thresholds: 20% combined share for competitors and 30% individual share for non-competitors.

Applying these thresholds — particularly in technology markets — raised practical challenges given limited data visibility and rapidly evolving technologies.

To address these concerns, the EU TTBER and UK TTBEO introduce several clarifications:

• for the purpose of applying market share thresholds in technology markets, technologies that have not yet generated sales of contract products in the preceding calendar year will be treated as holding a zero market share;
• the grace period allowing the block exemption to continue when market shares temporarily exceed the thresholds has been extended from two to three years; and
• market shares are now calculated as an average over the preceding three calendar years in order to address situations where data from a single year may not be representative.

The UK TTBEO additionally introduces an alternative statutory test for technology markets. Rather than replacing the existing market share thresholds, the UK regime supplements them by providing that an agreement may qualify for the block exemption where either:

• the applicable market share threshold, outlined above, is satisfied; or
• there are at least three independently controlled competing technology rights in addition to those controlled by the parties.

“Independent competing technology rights” are defined as technology rights owned or controlled by a third party that are interchangeable with or substitutable for the licensed technology rights, having regard to their characteristics, royalties, commercial strength and intended use.