Licensing Agreements and EU Competition Law: What You Need to Know

Licensing agreements are a key component of many businesses, allowing them to grant third parties the right to use their intellectual property (IP) for a fee. However, when it comes to licensing agreements in the European Union (EU), there are strict rules and regulations that businesses must follow to avoid breaching EU competition law.

EU competition law is designed to ensure fair competition and prevent anti-competitive behavior, such as price fixing and monopolies. When it comes to licensing agreements, EU competition law is primarily concerned with the potential for agreements to unduly restrict competition in the market.

So, what do businesses need to be aware of when entering into licensing agreements under EU competition law?

1. Avoid Anti-Competitive Restraints

Under EU competition law, licensing agreements must not contain any anti-competitive restraints. These can include clauses that restrict the licensee`s ability to compete with the licensor, such as exclusivity arrangements or non-compete clauses.

Furthermore, licensing agreements must not restrict competition in the market as a whole. For example, a licensing agreement that grants exclusive rights to a particular technology within a certain industry could be deemed anti-competitive if it restricts other businesses from using that technology in that industry.

2. Ensure Pro-Competitive Benefits

While licensing agreements must avoid anti-competitive restraints, they can include pro-competitive benefits that are beneficial to both the licensor and the licensee. These can include access to new markets, increased efficiency, and the ability to leverage expertise and resources.

When considering pro-competitive benefits, it is important to weigh them against any potential anti-competitive effects. If the benefits are outweighed by the anti-competitive effects, the licensing agreement may breach EU competition law.

3. Consider the Market Position of the Parties

When assessing licensing agreements under EU competition law, it is important to consider the market position of both the licensor and the licensee. If either party has a dominant position in the market, the licensing agreement may be subject to stricter scrutiny under EU competition law.

For example, a dominant licensor that imposes restrictive conditions on a licensee may be seen as abusing its dominant position and breaching EU competition law.

4. Consult with Competition Authorities

Finally, it is always advisable to consult with EU competition authorities before entering into licensing agreements that may raise competition concerns. This can help ensure that the agreement is compliant with EU competition law and avoid potential breaches that could result in significant fines and damage to business reputation.

In conclusion, while licensing agreements can be a valuable tool for businesses, they must be carefully structured to ensure compliance with EU competition law. By avoiding anti-competitive restraints, considering the market position of the parties, and seeking guidance from competition authorities, businesses can enter into licensing agreements that are fair, legal, and beneficial for all parties involved.