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Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Order)

This Order is a block exemption Order under section 6 of the Competition Act 1998 (“the Act”). It gives effect to the Competition and Markets Authority’s (“CMA”) recommendation that certain specialisation 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 14).

The block exemption can be cancelled before 31st December 2035 in respect of some specialisation agreements if:

  • there is a breach of the condition relating to market share in article 5, although if the condition 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 was first exceeded (see article 5(3));

  • a hardcore restriction is included in the agreement (see article 7);

  • the CMA cancels the effect of the exemption:

    • because of a failure of an undertaking to provide it with information about the agreement (see article 8(2));

    • because it considers that a particular agreement is not one which is exempt from the Chapter I prohibition as a result of section 9 of the Act (see article 9(1)).

The CMA is given a power to ask for information about agreements to which a person is a party (see article 8(1)).

A transitional provision also ensures that the Chapter I prohibition does not apply for two years to pre-existing agreements which satisfied the conditions for exemption provided for in Commission Regulation (EU) 1218/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements (EUR 2010/1218) but which do not otherwise satisfy the conditions for exemption provided for in this Order.

The Order also amends Commission Regulation (EU) 316/2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements (EUR 2014/316) to replace the reference in that regulation to Commission Regulation (EU) 1218/2010, which expires on 31st December 2022, with a reference instead to this Order.

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.