Article 8 Thresholds, market shares and duration of exemptionI1

Where, in the case of an R&D agreement falling within article 3(2)(a) or (b), at the time the agreement is entered into, two or more of the parties to the agreement are—

the agreement must meet the condition in paragraph (2).

The condition in this paragraph is that at the time the R&D agreement is entered into—

Where, in the case of an R&D agreement falling within article 3(2)(a) or (b), two or more of the parties to the agreement are undertakings competing in innovation at the time the agreement is entered into and—

the agreement must meet the condition in paragraph (5).

For the purposes of paragraph (3)—

The condition in this paragraph is that at the time the R&D agreement is entered into there must be three or more of the following—

Where, in the case of an R&D agreement falling within article 3(2)(a) or (b), the parties to the agreement are not competing undertakings at the time the agreement is entered into or the agreement meets all the conditions in paragraphs(2) and (5) to which it is subject—

In the case of an R&D agreement falling within article 3(2)(c) or (d), the block exemption has effect in relation to the agreement for the period beginning with the date the agreement is entered into and ending seven years after the time a contract product or contract technology is first put on the market within the United Kingdom, or if more than one contract product or contract technology is put on the market within the United Kingdom, after the time the first of them is put on the market, on condition that—

The block exemption continues to have effect in relation to an R&D agreement after the end of the seven year period under paragraph(6)(b) or (7)(as the case may be), subject to the condition that the combined market share of the undertakings which are parties to the R&D agreement must not exceed 25% of any market to which a contract product or contract technology belongs.

For the purposes of this article,the parties to an R&D agreement are not competing undertakings at the time the agreement is entered into, if neither paragraph (1) nor paragraph (3) applies to the agreement.

In this article—

• “actual competitor”, in relation to a contract product or contract technology, means an undertaking that is supplying an existing product, technology or process capable of being improved, substituted or replaced by the contract product or contract technology on the relevant geographic market;

• “competing R&D effort”, in relation to an R&D agreement, means a research and development effort in which a third party engages, alone or in cooperation with other third parties, and which concerns—

  1. (a)

     research and development of a new product or technology which is the same as, or likely to be substitutable for, a new product or technology that would be covered by the R&D agreement, or

  2. (b)

     an R&D cluster pursuing an aim or objective which is the same, or substantially the same, as an aim or objectivethat would be covered by the R&D agreement,

  and does not include any research and development effort in which any of the parties to the R&D agreement is also engaged (including as a financing party);

• “potential competitor”, in relation to a contract product or contract technology, means an undertaking that, in the absence of the R&D agreement relating to the contract product or contract technology, on realistic grounds and not just as a mere theoretical possibility, would be likely, within not more than three years, to undertake the necessary additional investments or incur the necessary costs to supply a product, technology or process capable of being improved, substituted or replaced by the contract product or contract technology on the relevant geographic market;

• “relevant product market”, in relation to an R&D agreement, means the market for products—

  1. (a)

     capable of being improved, substituted or replaced by a contract product, and

  2. (b)

     in relation to which—

     1. (i)

        two or more of the undertakings which are parties to the agreement, or

     2. (ii)

        in the case of an R&D agreement involving paid-for research and development, two or more of the undertakings referred to in paragraph (2)(b),

     are actual competitors or potential competitors;

• “relevant technology market”, in relation to an R&D agreement, means the market for technologies or processes—

  1. (a)

     capable of being improved, substituted or replaced by a contract technology, and

  2. (b)

     in relation to which—

     1. (i)

        two or more of the undertakings which are parties to the agreement, or

     2. (ii)

        in the case of an R&D agreement involving paid-for research and development, two or more of the undertakings referred to in paragraph(2)(b),

     are actual competitors or potential competitors;

• “undertaking competing in innovation”, in relation to an R&D agreement, means an undertaking which independently engages in, or, in the absence of the agreement, would be able and likely independently to engage in research and development efforts which concern—

  1. (a)

     research and development of a new product or technology which is the same as, or likely to be substitutable for, a new product or technologythat would be covered by the R&D agreement, or

  2. (b)

     an R&D cluster pursuing an aim or objective which is the same, or substantially the same, as an aim or objective that would be covered by the R&D agreement.