Page 79 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

are, or in the absence of the license would be, competitors). In this case the

licensing arrangement may harm competition by raising prices in an existing
market or reducing the pace of innovation. But the licensing arrangement's

possible efficiency-enhancing effects should also be considered.

The guidelines set out an antitrust safety zone, within which licensing
arrangements will not normally be challenged. These include those in which

there are no per se rules and in which the licenser and its licensees together
account for no more than 20 percent of the relevant market or markets.

Arrangements falling outside the safety zones depend on various
factors:

- Their implications for market structure, coordination of pricing or

output, and foreclosure of access to inputs.
- The extent to which they impose exclusivity. The guidelines refer to

two specific types: exclusive licenses, which restrict the right of licensors to

license others or to use the technology themselves (or both); and exclusive
dealing, that is, when a license restrains a licensee from using competing

technologies.
- The history of rivalry and the pace of innovation in the markets

affected.
- Efficiencies resulting from the arrangement. If these outweigh

anticompetitive effects, the arrangements generally will not be challenged

[U.S. Department of Justice and Federal Trade Commission 1995:18-22].
In the past, developing countries have been especially concerned with

the use of restrictive licensing practices (for example, tying requirements,
exclusive territories, exclusive grant-back clauses, or field-of-use

restrictions) in international technology licensing agreements. Competition
enforcement should address such practices case by case. A strict approach is

likely to be self-defeating. Sweeping prohibition of restrictive practices in

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