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The year 2004 saw the replacement of the EU's competition law notification procedure with a system of self-evaluation, and the completion, with the adoption of the new Technology Transfer Block Exemption Regulation and related guidelines, of the European Commission's revamping of much of the substantive law under Article 81. Analysing, under the new rules collaboration agreements regarding the development, production and marketing of new pharmaceutical products, and the licensing of the related IPRs, provides a useful opportunity to test the new rules as applied to a world of fast-paced, complex and sophisticated agreements in a particular sector. The result of this exercise is to highlight some important competition law issues raised by common contractual provisions, and the need for clarification by the Commission of certain obscurities and inconsistencies in the new regulations, including the related notices and guidelines.

Although the new regulatory framework was intended to bring greater clarity and a better focus on market effects, applying it in practice to the types of agreement considered is a difficult and complex exercise. Evaluating the legality of an agreement requires determining which of the various block exemptions applies, identifying the relevant product and geographical markets (an exercise that presents special challenges in the case of pharmaceutical products); determining whether the parties are deemed to be competitors for the purpose of the relevant block exemption; determining whether the parties' individual or joint market shares fall below the relevant thresholds (a determination which may of course change over the life of the agreement); analysing the agreement to see if it contains provisions caught by the "black lists" (which set forth the hardcore restrictions); and, if the relevant market share thresholds are exceeded, evaluating whether the agreement nonetheless qualifies for exemption on the basis of all the facts and circumstances.

Among the contractual provisions in cooperation agreements that the parties often attach particular importance to, are those obliging the parties not to develop or market competing products, and provisions allocating geographical or customer markets. These provisions are subject to constraints, the scope of which varies from one group exemption to another. The apparent rigidity of the "black lists" may be palliated by the possibility of showing by economic analysis that a given provision does not produce anti-competitive effects. This possibility, referred to briefly and cryptically in the guidelines, merits more explicit recognition and development.

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