Horizontal Guidelines adopted today

The European Commission has revised its rules for the assessment of co-operation agreements between competitors, so called horizontal co-operation agreements (see here).

Earlier this year, the draft guidelines were subject to a public consultation (see responses here).

A key feature is the substantial revision of the chapter on standardization agreements.

Para 269 : When the standard constitutes a barrier to entry, the company could thereby control the product or service market to which the standard relates. This in turn could allow companies to behave in anti-competitive ways, for example by "holding-up" users after the adoption of the standard either by refusing to license the necessary IPR or by extracting excess rents by way of excessive royalty fees thereby preventing effective access to the standard.

Para 285 : In order to ensure effective access to the standard, the IPR policy would need to require participants wishing to have their IPR included in the standard to provide an irrevocable commitment in writing to offer to license their essential IPR to all third parties on fair, reasonable and non-discriminatory terms ("FRAND commitment") That commitment should be given prior to the adoption of the standard. At the same time, the IPR policy should allow IPR holders to exclude specified technology from the standard-setting process and thereby from the commitment to offer to license, providing that exclusion takes place at an early stage in the development of the standard. To ensure the effectiveness of the FRAND commitment, there would also need to be a requirement on all participating IPR holders who provide such a commitment to ensure that any company to which the IPR owner transfers its IPR (including the right to license that IPR) is bound by that commitment, for example through a contractual clause between buyer and seller.

Para 299 : standard-setting agreements providing for ex ante disclosures of most
restrictive licensing terms, will not, in principle, restrict competition within the
meaning of Article 101(1).

The rules come into effect from 1 January 2011.

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Trond Undheim, Ph.D, Director of Standards Strategy and Policy at the Oracle Corporation, speaker, entrepreneur, blogger, and author, is one of the world’s leading experts on technology and society. LinkedIn profile

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