Explanatory note
United Kingdom
(This note is not part of the Order)
This Order is a block exemption Order under section 6 of the Competition Act 1998 (c. 41) (“the Act”). It gives effect to the Competition and Markets Authority’s (“CMA”) recommendation that certain R&D agreements (as defined in article 3(2) of the Order) constitute a category of agreements which are likely to be exempt agreements as a result of section 9 of the Act. Agreements which fall within the category specified in article 3 of the Order are exempt from the prohibition in Chapter 1 of Part 1 of the Act (“the Chapter I prohibition”).
The block exemption applies to such agreements to the extent that they fall within the scope of section 2 of the Act (agreements etc. preventing, restricting or distorting competition ).
The block exemption applies from 1st January 2023 (see article 1(b)) and will cease to have effect at the end of 31st December 2035 (see article 20).
The block exemption may be cancelled before 31st December 2035 in respect of some R&D agreements if:
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there is a breach of the conditions relating to access to the results of the research and development (see article 5), access to pre-existing know-how (see article 6) or joint exploitation (see article 7);
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there is a breach of any of the conditions relating to market share and competition in innovation in article 8, although if the condition in article 8(8) relating to market shares following a period of joint exploitation is met initially, and only subsequently breached, the breach has the effect of cancelling the block exemption in respect of the agreement but only with effect from the end of the period of two consecutive calendar years following the year in which the market share threshold concerned was first exceeded (see article 11(2));
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a hardcore restriction is included in the agreement (see article 10);
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an excluded restriction is included in the agreement, although if the excluded restriction is severable from the agreement the block exemption is cancelled only in respect of the excluded restriction (see articles 12(1) and 13);
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the CMA cancels the effect of the exemption:
The CMA is given a power to ask for information about agreements to which a person is a party (see article 14(1)).
A transitional provision also ensures that the Chapter I prohibition does not apply for 12 months to pre-existing agreements which satisfied the conditions for exemption provided for in Commission Regulation (EU) 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements (EUR 2010/1217)but which do not otherwise satisfy the conditions for exemption provided for in this Order. A further transitional provision ensures that new requirements designed to protect competition in innovation apply only in relation to R&D agreements entered into on or after 1st January 2024.
The Order also amends two retained block exemption regulations (as defined in section 10(12) of the Act) to update references in those regulations to other retained block exemption regulations which have expired, or are about to expire, so that they are instead references to block exemption orders under section 6 of the Act (including this Order) intended to replace the expired or expiring retained block exemption regulations.
Guidance on the block exemption is available from the CMA online at http://www.gov.uk/cma or by writing to Competition and Markets Authority, The Cabot, 25 Cabot Square, London E14 4QZ.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. An Explanatory Memorandum has been prepared for this Order and is available alongside this instrument on the UK Legislation website www.legislation.gov.uk.