The Competition Act 1998 (Technology Transfer Agreements Block Exemption) Order 2026
This Order establishes a block exemption from the Chapter I prohibition of the Competition Act 1998 for specific technology transfer agreements involving the licensing or assignment of technology rights such as patents, know-how, and software copyright.
It directs that such agreements are exempt from competition law provided they meet specific market share thresholds and do not contain restricted anti-competitive clauses.
The Order applies to licensors and licensees operating in the United Kingdom and empowers the Competition and Markets Authority to withdraw the exemption in individual cases where an agreement is found to be anti-competitive.
Arguments For
The order states that the Competition and Markets Authority (CMA) recommended the exemption after public consultation, determining that technology transfer agreements typically promote competition by encouraging technical and economic progress.
The legislation asserts that specifying these categories of agreements provides legal certainty for businesses regarding compliance with the Chapter I prohibition of the Competition Act 1998.
Proponents within the document framing suggest a transitional period until April 2027 ensures that agreements valid under the previous regulatory regime (assimilated TTBER) are not immediately penalized for technical non-compliance.
The document notes that the order remedies a defect in previous regulations regarding Scottish procurement definitions, ensuring consistent application across the UK.
Arguments Against
Legal scholars may note that the market share thresholds (20% for competitors and 30% for non-competitors) require complex economic assessments that may be difficult for smaller undertakings to calculate accurately.
Affected parties might argue that the CMA’s power to cancel the exemption for failure to provide information within 10 working days creates a significant administrative burden.
Critics may question the 2038 expiry date, arguing that the long duration of the order could fail to account for rapid technological shifts in the digital economy.
Civil and commercial lawyers might identify ambiguity in determining what constitutes "realistic grounds" for being a potential competitor versus a "mere theoretical possibility."
Citation, commencement and extent
- -(1) This Order may be cited as the Competition Act 1998 (Technology Transfer Agreements Block Exemption) Order 2026 and comes into force on 1st May 2026.
(2) This Order extends to England and Wales, Scotland and Northern Ireland.
This section establishes the official title of the legislation and sets the commencement date as 1 May 2026.
It specifies that the legal provisions apply throughout the entire United Kingdom.
Interpretation
- [Contains definitions for 'the block exemption', 'competing undertakings', 'connected undertaking', 'contract product', 'know-how', 'licensed technology rights', 'relevant market', 'technology rights', and other technical terms.]
This section provides legal definitions for the terminology used throughout the order.
It clarifies that 'technology rights' include patents, know-how, design rights, and software copyrights, while 'know-how' must be secret, significant, and described comprehensively to qualify.
Block exemption
- -(1) The category of agreements identified in paragraph (2) as technology transfer agreements is specified for the purposes of section 6 of the Competition Act 1998 (and accordingly a block exemption applies in respect of technology transfer agreements).
(2) Technology transfer agreements are agreements entered into between two undertakings to the extent they provide for— (a) technology rights to be licensed for the purpose of the production of particular products by the licensee or a sub-contractor of the licensee, or (b) technology rights to be assigned for the purpose of the production of particular products by the assignee in such a way that part of the risk associated with the exploitation of the technology rights remains with the assignor, but also to the extent they include further provision (if any) of the kind in paragraph (3). [...] (4) Subject to paragraph (5), the block exemption has effect in relation to a technology transfer agreement for as long as at least one of the licensed technology rights— (a) has not expired, lapsed or been declared invalid, or (b) in the case of know-how, remains secret. [...]
This section defines the scope of the block exemption, applying it to licenses or assignments between two parties for product production.
The exemption remains active as long as the underlying intellectual property rights have not expired or the shared know-how remains secret.
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. [...]
This section sets the maximum market share limits for agreements to qualify for the exemption.
If the parties are competitors, their combined market share must not exceed 20%; if they are not competitors, each party's share must not exceed 30%.
Hardcore restrictions
- [Prohibits restrictions on price-fixing, output limitations, market allocation, and research limitations, with specific exceptions for non-reciprocal agreements and selective distribution systems.]
This section lists 'hardcore' anti-competitive practices that, if included in an agreement, will void the block exemption.
Examples include price-fixing for third-party sales and restricting a licensee's ability to exploit their own technology rights.
Excluded restrictions
- [Prohibits obligations for exclusive grant-backs on improvements and non-challenge clauses regarding the validity of intellectual property rights.]
This section identifies specific clauses that are generally prohibited, such as forcing a licensee to give back exclusive rights to their own improvements.
Unlike hardcore restrictions, if an excluded restriction can be severed from the agreement, the rest of the agreement may still benefit from the exemption.
Obligation to provide information and effect of breach
- -(1) A party to an agreement in respect of which the benefit of the block exemption is claimed must provide to the CMA such information in connection with the agreement as the CMA may request by notice in writing.
(2) The party must provide the information within— (a) the period of ten working days starting with the relevant day, or (b) if, having had regard to all the circumstances of the case, the CMA has agreed in writing a longer period, the agreed period. [...]
Parties claiming the exemption are required to provide information to the Competition and Markets Authority upon request.
Failure to provide this information within 10 working days can result in the cancellation of the block exemption for that specific agreement.
Transitional provision
- [Provides a one-year grace period until 30 April 2027 for agreements that were exempt under the previous EU/assimilated regulations but do not meet the new criteria.]
This section ensures that existing agreements that were legal under the old 'assimilated TTBER' rules remain exempt for one year after this Order commences.
This transition period allows businesses time to bring their contracts into compliance with the new UK-specific requirements.
Expiry
- This Order ceases to have effect at the end of 31st December 2038, except for article 14.
This section dictates that the block exemption will expire at the end of 2038.
This sunset clause ensures the policy must be reviewed or replaced after a 12-year period.
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