IP Europe respectfully disagrees with the European Commission’s conclusion that the proposed Automotive Licensing Negotiation Group (ALNG) does not raise competition concerns. In practice the ALNG would be bad for innovation and bad for consumers. 

It is unclear that the ALNG could (or in practice would) increase efficiency in the licensing of SEPs related to digital technologies for automakers, especially given the licensing solutions already available  (bi-lateral licensing and fixed price licensing via the Avanci platform) and the fact that all the automakers concerned are already licensed. 

In search of a better deal

Rather, the automakers’ primary motive for creating the ALNG appears to be to depress licensing fees below FRAND levels by exercising monopsony power. This would undermine the ability and incentives of companies (including IP Europe’s members) to invest billions of euros annually in risky R&D and to contribute to the development of global open standards such as 5G and 6G. 

As the Commission’s own Competitiveness Compass observes: “Engaging systematically in global standard setting processes is very important to influence outcomes aligned with EU interests, helping industry to maintain competitive positions in key technology markets, such as 5G and 6G telecommunications, AI, renewable energy technologies, electric vehicle charging infrastructure, accessibility and the Internet of Things.” 

In any event, we believe that the Commission has erred in its approach to market definition and that the ALNG members (which comprise the major western automakers) would have a combined market share that far exceeds 15% of the total relevant demand on a properly defined relevant purchasing market(s). 

Ignoring risks

There is a high risk that the ALNG could lead to coordinated hold-out or collective boycott to delay or avoid the conclusion of licensing agreements, serve as a front for buyers’ cartels, and enable implementers of standardised technologies in the automotive sector—many of them direct competitors—to engage in anti-competitive information exchange and/or collusion. This is particularly important because the ALNG has participants from multiple levels of the supply chain.  

We also regret the Commission’s failure to consult relevant industry stakeholders in the context of drafting this guidance. Industry stakeholders were not invited to provide input. 

It is imperative that the Commission carefully monitor the ALNG going forward. Industry, for its part, will certainly do so. 

Any other proposed LNGs should be assessed by all relevant authorities on a case-by-case basis for compliance with all applicable competition law rules.