Frand Commitments and EC Competition Law: A Reply to Philippe Chappatte

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Series Details Volume 6, Number 1, Pages 129-174
Publication Date January 2010
ISSN 1744-1056
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"A paper recently published in this journal by Mr Philippe Chappatte urges the European Commission (the Commission) to use its antitrust powers to enforce fair, reasonable and non-discriminatory (FRAND) commitments. These commitments are promises by holders of patents that are technically essential to an industry standard that they will grant licences to such patents on FRAND terms. The paper asserts that antitrust intervention to enforce FRAND  commitments is justified by “strong policy reasons”, namely, the risk of consumer harm absent intervention, and the need for “a clear legal precedent set by the Commission in this field”."
"This reply is divided into six sections. Section B analyses the scope and extent of the alleged risks of “hold-up” and “royalty stacking” (see points 1–3 above). Section C reviews the scope and meaning of FRAND commitments (see points 4–7 above). Section D shows that the various benchmarks proposed by Mr Chappatte to determine what a “fair and reasonable” royalty should be in a given case are not supported by industry practice, and are in fact unworkable (see point 8). Section E explains the reasons why, contrary to the position expressed in the paper, the Commission and other competition authorities should be careful not to curtail the licensing flexibility afforded by the FRAND promise by heeding the unwarranted calls for novel applications of antitrust law to regulate prices and solve unproved problems. Section F concludes."
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