Article 5 Market share and other thresholds

(1)

Where the undertakings party to the technology transfer agreement are competing undertakings, the agreement must meet the condition in paragraph (2).

(2)

The condition in this paragraph is that—

(a)

the combined market share of the parties to the technology transfer agreement does not exceed 20% of any relevant market for the contract products, and

(b)

either—

(i)

the combined market share of the parties to the technology transfer agreement does not exceed 20% of any relevant market for the licensed technology rights, or

(ii)

there are three or more independent competing technology rights.

(3)

Where the undertakings party to the technology transfer agreement are not competing undertakings, the agreement must meet the condition in paragraph (4).

(4)

The condition in this paragraph is that—

(a)

the market share of each party to the technology transfer agreement does not exceed 30% of any relevant market for the contract products, and

(b)

either—

(i)

the market share of each party to the technology transfer agreement does not exceed 30% of any relevant market for the licensed technology rights, or

(ii)

there are three or more independent competing technology rights.

(5)

Undertakings party to a technology transfer agreement are competing undertakings if—

(a)

they are both an actual competitor on the relevant market for the licensed technology rights, and if there is more than one relevant market for the licensed technology rights, they are both an actual competitor on the same relevant market, or

(b)

they are both an actual competitor or a potential competitor on the relevant market for the contract products, and if there is more than one relevant market for the contract products, they are both an actual competitor or potential competitor on the same relevant market.

(6)

For the purposes of paragraph (5), an undertaking party to a technology transfer agreement is—

(a)

an actual competitor on a relevant market for the licensed technology rights, if it grants licences of technology rights on that relevant market;

(b)

an actual competitor on a relevant market for the contract products if, ignoring the technology transfer agreement, it sells products on that relevant market;

(c)

a potential competitor on a relevant market for the contract products if, ignoring the technology transfer agreement, it would, on realistic grounds and not just as a mere theoretical possibility, in response to a small and permanent increase in relative prices, be likely to undertake the necessary additional investments or incur other necessary costs to enter that relevant market within a period of time that is sufficiently short to impose competitive pressure on undertakings that are already selling products on that relevant market.

(7)

In this article “independent competing technology rights”, in relation to a technology transfer agreement, means technology rights which are—

(a)

owned or controlled by a third party, and

(b)

interchangeable with, or substitutable for, the licensed technology rights, by reason of the technology rights’ characteristics, the royalties payable in respect of those rights, their commercial strength and their intended use.