# The Competition Act 1998 (Technology Transfer Agreements Block Exemption) Order 2026, Article 7: Hardcore restrictions


(1) A technology transfer agreement between undertakings which are competing undertakings must not contain a hardcore restriction within the meaning of paragraph (2).
(2) A hardcore restriction within the meaning of this paragraph is one or more provisions which, directly or indirectly, in isolation or in combination with other factors under the control of the parties to the technology transfer agreement, have as their object—
(a) the restriction of the ability of a party to the agreement to determine its prices when selling products to third parties,
(b) the limitation of output, except limitations on the output of contract products imposed on the licensee in a non-reciprocal agreement or imposed on only one of the licensees in a reciprocal agreement,
(c) the allocation of markets or customers, subject to the exceptions set out in paragraph (3),
(d) the restriction of the licensee’s ability to exploit its own technology rights, or
(e) the restriction of the ability of either of the parties to the agreement to carry out research and development, unless the restriction is indispensable to prevent the disclosure of any know-how licensed under the agreement to third parties.
(3) The following are not a hardcore restriction falling within paragraph (2)(c)—
(a) an obligation on the licensor or the licensee, in a non-reciprocal agreement—
(i) not to produce products with the licensed technology rights within the exclusive territory reserved for the other party, or
(ii) not to sell the contract products actively or passively into the exclusive territory or to the exclusive customer group reserved for the other party;
(b) the restriction, in a non-reciprocal agreement, of active sales of the contract products by the licensee into the exclusive territory or to the exclusive customer group allocated by the licensor to another, third party, licensee (L) provided L and the licensor were not competing undertakings at the time of the conclusion of the licensing agreement between them;
(c) an obligation on the licensee to produce the contract products only for its own use, provided that, where the licensee incorporates the contract products into its own products, it is not restricted from selling the contract products actively or passively as spare parts for its own products;
(d) an obligation on the licensee, in a non-reciprocal agreement, to produce the contract products only for a particular customer, where the licence was granted in order to create an alternative source of supply for that customer.
(4) A technology transfer agreement between undertakings which are not competing undertakings must not contain a hardcore restriction within the meaning of paragraph (5).
(5) A hardcore restriction within the meaning of this paragraph is one or more provisions which, directly or indirectly, in isolation or in combination with other factors under the control of the parties to the technology transfer agreement, have as their object—
(a) subject to paragraph (6), the restriction of a party’s ability to determine its prices when selling products to third parties,
(b) the restriction of the territory into which, or the customers to whom, the licensee may passively sell the contract products, subject to the exceptions set out in paragraph (7), or
(c) subject to paragraph (8), the restriction of active sales or passive sales to end-users by a licensee which is a member of a selective distribution system for the contract products and operates at the retail level.
(6) Imposing a maximum sale price or recommending a sale price is not a hardcore restriction falling within paragraph (5)(a), provided that the price does not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, either of the parties to the technology transfer agreement.
(7) The following are not a hardcore restriction falling within paragraph (5)(b)—
(a) the restriction of passive sales into an exclusive territory or to an exclusive customer group reserved for the licensor;
(b) an obligation on the licensee to produce the contract products only for its own use, provided that, where the licensee incorporates the contract products into its own products, it is not restricted from selling the contract products actively or passively as spare parts for its own products;
(c) an obligation to produce the contract products only for a particular customer, where the licence was granted in order to create an alternative source of supply for that customer;
(d) the restriction of sales to end-users by a licensee operating at the wholesale level of trade;
(e) the restriction of sales to unauthorised distributors located in a territory where the licensor operates a selective distribution system for the contract products.
(8) Prohibiting a member of a selective distribution system for the contract products from operating out of a place of establishment which is not authorised under the selective distribution system is not a hardcore restriction falling within paragraph (5)(c).
(9) Where the undertakings party to a technology transfer agreement are not competing undertakings at the time the agreement is entered into but become competing undertakings after that time, paragraph (4) and not paragraph (1) applies for the full duration of the agreement unless—
(a) the agreement is subsequently amended in any material respect, or
(b) a new technology transfer agreement is entered into between the parties concerning competing technology rights.
(10) In this article—
“active sales” means—
(a) actively targeting customers by for instance calls, e-mails, letters, visits or other direct means of communication,
(b) targeted advertising and promotion, by means of print or digital media, offline or online, including online media, digital comparison tools or advertising on search engines targeting customers in specific geographical areas or customer groups,
(c) advertisement or promotion that is only attractive for the buyer if it (in addition to reaching other customers) reaches a specific group of customers or customers in a specific geographical area (and is considered active selling to that customer group or customers in that geographical area),
(d) offering on a website language options different to the ones commonly used in the geographical area in which the distributor is established, or
(e) using a domain name corresponding to a geographical area other than the one in which the distributor is established,
and related expressions are to be construed accordingly;
“competing products” means products which are regarded by buyers as interchangeable with, or substitutable for, one another, by reason of the products’ characteristics, their prices and their intended use;
“competing technology rights” means technology rights which are regarded by licensees as interchangeable with, or substitutable for, one another, by reason of the technology rights’ characteristics, the royalties payable in respect of those rights and their intended use;
“devolved Scottish authority” has the same meaning as in section 2 of the Procurement Act 2023;
“digital comparison tools” means online intermediary services used by end users to compare prices, quality or other characteristics of, and potentially to switch to or purchase, goods or services from a range of businesses;
“exclusive customer group”, in relation to a technology transfer agreement, means a group of customers to which only one party to the agreement is allowed to actively sell the contract products;
“exclusive territory”, in relation to a technology transfer agreement, means a given territory within which only one undertaking is allowed to produce the contract products, but includes a territory within which one or more other licensees are allowed to produce the contract products if the production is for a particular customer only and the other licences were granted in order to create an alternative source of supply for that customer;
“non-reciprocal agreement” means a technology transfer agreement under which—
(a) one undertaking grants another undertaking a licence of technology rights for the purposes of the production of products, or
(b) two undertakings grant each other such a licence, and those licences do not concern competing technology rights and cannot be used for the production of competing products;
“passive sales” means—
(a) sales in response to unsolicited requests from individual customers, including delivery of goods or services to such customers without the sale having been initiated through advertising actively targeting the particular customer group or geographical area,
(b) general advertising or promotion that reaches customers in other distributors’ geographical areas or customer groups (whether exclusive or not) but which is a reasonable way to reach customers not in those other distributors’ geographical areas or customer groups (whether exclusive or not), such as customers in a supplier’s own geographical area, including where, for example, it would be attractive for the buyer to incur the costs of the general advertising or promotion concerned even if it would not reach customers in other distributors’ geographical areas or customer groups (whether exclusive or not), or
(c) participating in a public procurement exercise undertaken in accordance with—
(i) the Procurement Act 2023, or
(ii) in respect of a public authority that is a devolved Scottish authority, the Public Contracts (Scotland) Regulations 2015, the Concession Contracts (Scotland) Regulations 2016 or the Utilities Contracts (Scotland) Regulations 2016,
and related expressions are to be construed accordingly;
“public authority” has the same meaning as in section 2(2) of the Procurement Act 2023;
“reciprocal agreement” means a technology transfer agreement under which two undertakings grant each other, in the same or separate contracts, a licence of technology rights for the purposes of the production of products, and those licences concern competing technology rights or can be used for the production of competing products;
“selective distribution system” means a distribution system set up by a licensor under which—
(a) the licensor undertakes to grant licences of technology rights for the purposes of the production, either directly or indirectly, of particular products only to licensees selected on the basis of specified criteria (“authorised distributors”), and
(b) those licensees undertake not to sell the products concerned to distributors who are not authorised distributors (“unauthorised distributors”) within the territory reserved by the licensor to operate that system.
(11) In paragraph (3)(b) the references to “competing undertakings”, “exclusive customer group” and “exclusive territory” have effect in relation to the licensing agreement concluded between the licensor under the technology transfer agreement and L as if that licensing agreement were a technology transfer agreement.

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Source: https://www.legislation.gov.uk/uksi/2026/369/article/7 (the official version)
Page: https://openlegislation.uk/competition-act-1998-technology-transfer-agreements-block-exemption-order-2026/article-7
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.