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Intellectual Property - EU Competition Laws

EU Competition Laws

EU competition law covers an agreement or concerted practice between two or more businesses which has the object or effect of preventing, restricting or distorting competition and which affects trade between member states (this is widely interpreted and may cover single country agreements).

Prohibited agreements include those which fix prices or trading conditions; limit production, markets, technical development or investment; divide up markets; impose discriminatory terms; or create tie-ins.

Control is exercised by the European Commission and their powers to collect information from you are draconian. In addition, fines imposed can amount to 10% of your global turnover.

Certain common agreements are covered by block exemptions - namely patent and know-how licences, research and development agreements, franchising agreements, exclusive distribution agreements and exclusive purchase and supply agreements. If the agreement contains only restrictions which are permitted by the relevant block exemption, and you otherwise fall within the block exemption, no further action is necessary. However, if not, you need to consider obtaining individual exemption by the European Commission. If the combined turnover of the two parties to the agreement is not significant then the restrictions may well not apply.

If you are in a dominant position in a particular market in a part of the EU, you must be particularly careful to guard against any accusation that you abused that dominant position in the way you conducted your business. Such matters may similarly be investigated by the European Commission regardless of an agreement or concerted practice.

Finally, the importance of the principle of free movement of goods means that IPRs cannot be exercised if the result or intent of such exercise is to prevent the parallel export or parallel import of goods within the EU where you have previously licensed another to market products incorporating the IPRs within the EU.

If you are in a dominant position or become so as a result of the agreement extra care is neded and stricter rules apply. This is a complex area upon which expert advice is necessary.

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