Although technology transfer is not usually an issue directly addressed by competition rules, in the European Union it is possible to find Commission Regulation (EC) 772/2004, on the application of Article 81(3), which, although not currently in force, establishes valid criteria at the time of analyzing a technology transfer agreement. On 1 May 2014, this Regulation was replaced by the Commission Regulation (EU) 316/2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union. This new Regulation has practically the same purposes as the previous one, that is, to seek a balance between the promotion of competition and the benefits that can be obtained from technology transfers; to this end, this new Regulation establishes assumptions in which it can be assured that a technology transfer cannot be sanctioned for a possible breach of competition law.
Similarly, in the United States there are the Guidelines for the Licensing of Intellectual Property, which is a document prepared by the Department of Justice and the Federal Trade Commission in order to clarify doubts regarding the application of competition rules with respect to technology transfers.
Both documents agree in that they explicitly recognize that technology transfer agreements tend to have a positive impact on competition, since they protect the economic incentives of researchers and facilitate the dissemination of knowledge, which also prevents resources from being spent on duplicate research that will obtain the same results.
In this sense, although a technology transfer agreement may contain clauses that restrict competition (such as exclusivity or prohibitions on resale), the main purpose of these clauses is usually to protect the value of new scientific knowledge and to protect investments made in research, and could therefore be considered legitimate.
Although this is a positive view of technology transfer agreements, this does not mean that, in practice, there have not been cases in which the authorities have considered that the form in which such agreements have been entered into is anti-competitive. This is because, as mentioned, many times these agreements have clauses aimed at restricting competition. In this sense, it is not difficult for a patent or software license agreement to include among its clauses various restrictions, which may range from prohibiting the sharing of technology with third parties to limiting the commercialization of products.
This does not mean that technology transfer agreements will be considered anti-competitive per se by the competition authorities; rather, depending on the form the agreement takes, it could constitute anti-competitive conduct punishable in different jurisdictions, including the European Union and the United States.
Although it is not possible to establish a general rule to indicate whether a technology transfer agreement is anticompetitive, there are several factors that must be taken into consideration. The first of these is the market power of the companies that participate in the agreement; in this sense, if they have a great deal of market power, it is more likely that the restrictions to competition included in the agreement will be considered unlawful. Similarly, if these restrictions are excessive or extend over a long period of time, they are also more likely to be considered unlawful. Conversely, if the restrictions on competition accompanying an anticompetitive agreement are proportionate to the efficiencies generated by the agreement, or if they are indispensable for the implementation of a lawful agreement, they are more likely to be considered lawful by the competition authorities.
An emblematic case can be seen in Microsoft (2001). This case analyzed the limitations that Microsoft imposed on computer manufacturers and users of the Windows operating system, limiting their ability to uninstall Internet Explorer. According to Microsoft, these limitations were necessary, since they encouraged the development of new software technologies and also favored consumers, since it allowed them to have a web browser free of charge. However, the U.S. courts rejected Microsoft's arguments, due to the major restrictions to competition that these meant, since, due to Microsoft's market power in the operating systems market, they restricted the entry of new companies that could offer alternative services to Internet Explorer.
On the other hand, in the European Union there is GlaxoSmithKline (2009). In this case, GlaxoSmithKline, a British pharmaceutical company, when selling drugs to Spanish wholesalers, required them to refrain from exporting such drugs to other European Union countries. In this regard, the justification given by GlaxoSmithKline was that such restriction sought to protect the sales made by such company to other countries of the European Union, due to the fact that, due to internal regulations of each country, the prices of medicines could have large differences from one country to another; in view of this situation, GlaxoSmithKline sought to prevent Spanish wholesalers from exporting cheaper medicines to the United Kingdom than the pharmaceutical company.
When analyzing this case, the purposes pursued by the European Community regulations were taken into consideration, among which, in addition to protecting competition and consumers, the creation of a common market stands out. The limitations imposed by GlaxoSmithKline on Spanish wholesalers, despite the justifications it may have had, had the main effect of breaking with the common market by establishing barriers to exports that were contrary to the Community spirit. For this reason, the Court of Justice decided that the export prohibition imposed was unlawful.
For the above reasons, when designing a technology transfer agreement, it must be taken into consideration that any restriction to competition included in the agreement must be justified and proportional to the purposes sought by the agreement. Likewise, the economic efficiencies must be weighed against the restrictions to competition that the agreement would generate.
