BIBLIOGRAPHY: LUNDQVIST Björn, Edward Elgar, 2014, 480 p.

Standardization under EU Competition Rules and US Antitrust Laws – The Rise and Limits of Self-Regulation, Björn LUNDQVIST

Björn Lundqvist

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Mr Björn Lundqvist is Associate Professor of Competition Law at the Copenhagen Business School, Denmark. His book is a comprehensive analysis of standard-setting procedure and the regulation of standard-essential patents.

Standardization under EU Competition Rules and US Antitrust Laws – The Rise and Limits of Self-Regulation is made up of eight highly readable sections, the first and the last being respectively the introduction and the conclusion. The book shows that US courts use intellectual property law to address access to standard-essential patents, while European courts make use of antitrust rules. Its purpose is to consider how the standardization process is regulated under United Sates antitrust law and EU competition rules. According to the author, the differences between the European Union and the United States mirror different attitudes regarding property, fairness, equity, public interest and competition.

In the first chapter, Mr Lundqvist discusses the effect of different existing standards on competition. In his view, the proliferation of patents is not necessarily a problem if it is possible to gain access to markets by licensing the intellectual property rights, however situations where patent “thickets” (“enchevêtrements/maquis de brevets”) occur in network industries or in industries governed by interoperability technology standards are more problematic. The author explains that from a competition law perspective, patent thickets play a part for those products or technologies that are not active on markets with network effects, and that there are still markets which do not display network effects. These markets may also appear in the Information and Communications Technology sector. Presumably, as this sector matures and the innovation rate declines, these markets will start to proliferate. Therefore, standard-setting in these markets must be analyzed differently from the competition law perspective. The chapter also discusses the theories of Schumpeter, Hayek, and Arrow on the innovation and competition process as relevant to a different degree, depending on the technologies and markets under scrutiny. However, according to the author, competition law should not refrain from finding certain conduct to be a violation of “competition on the merits,” irrespective of a finding of anticompetitive effects under the model of perfect competition, if the judge can determine that the conduct would restrict or limit innovation.

The second chapter discusses the governance and institutional structure of standard setting organizations. A standard setting organization is a broader term including standard development organizations and also, for instance, private consortia of firms joining together to advance a technical solution to an issue. The author writes that the widespread scholarly neglect of the phenomenon of standard development organizations and product standards in modern market regulations seems striking in the light of the preoccupation of scholars with a whole series of processes that standardization seems to exemplify. He explains that standardization bodies take on greater prominence at both the international and domestic level of government, not because of a general decision to cede power to the private sector, but rather because of a number of independent factors such as, presumably, markets, and because private actors can approach problems irrespective of territorial boundaries. It is said that while private standards are on the rise, public standards are on the decline, and that private standards are, presumably, immune to the reach of Article 34 TFEU or the US dormant commerce clause (a restriction prohibiting a state from passing legislation that improperly burdens or discriminates against interstate commerce). Public standards have been, it is written, under attack in cases such as Dassonville and Keck for preventing the possibility of accessing markets, in American cases under the dormant commerce clause such as Minnesota v. Clover Leaf Creamary Co. and Bibb v. Navajo Freight Lines, and also with reference to private parties’ handling of patents, under the patent misuse doctrine. The author further explains that while standards today originate from firms’ reaction to the need for, for instance, standards for interoperability, infrastructure standards, at least under the EU system, have originated historically from public efforts to regulate society. Among the conclusions he comes up with, he writes notably that it is clear that the mission of standard development organizations is to create standards, while governments’ strategy of delegating the responsibility for creating or upholding competition or the rate of innovation on markets to these organizations is not, and will not be, successful. Mr Lundqvist concludes that concerns in that respect must be met under intellectual property and competition law, and that the relevant market must be analyzed in detail under competition law in order to find anti-competitive effects and remedies.

The third chapter discusses the regulation of standardization agreements and adjoining collaborations. It is explained that in light of the “rather scant case-law” and the Horizontal Guidelines, the EU Commission is still carving out a test for standard-setting procedure. It seems clear to the Commission that if the industry and the market can hold several standards, competition should be promoted. It is in these circumstances that the Commission has found violations of Article 101 TFEU. The author further explains that it is obvious that several of the agreements scrutinized by the Commission under the individual exemption procedures were captioned research and development agreements, revolving less around creating a technical solution and more around establishing a standard or a pool for the promotion of the technology, innovation or product in question. Regarding innovation competition, it is said that the undertakings can use it as an excuse to collaborate. They may point to all other research and development centers available globally and those other firms “at least have the facilities to create similar innovation and therefore they should be allowed to collaborate” (p. 224).

The fourth chapter discusses patent tools. It is explained that the European Commission has monitored and followed American development of patent tools: the Commission “has not shown its standpoint with reference to the antitrust agreement of patent tools as publicly as the US antitrust agencies; or, at least, it has avoided revealing its own standpoint until the EU antitrust agencies have published their opinion” (p. 229). The author thinks that patent tools will probably fall into oblivion soon, not because they do not harbour collusive effects, but rather because the safe harbours are large: the problems of patent hold-up and patent ambush under technology standards, and the terms on which essential patents should be made available have attracted far more interest from the courts and agencies.

The fifth chapter discusses unilateral conduct under standards. A clear dichotomy is identified between legal developments in the United States and in the EU: the United States has decided to use intellectual property law and unfair competition law, while the courts in Europe have decided to use the EU antitrust rules as a tool to access SEPs. It is suggested that by using intellectual property law and unfair competition rules to grant what must be regarded as compulsory licenses to infringing firms, the Supreme Court has opened up the possibility of using notions and terms such as “fairness,” “public interest” and “excessive” in an attempt to have the courts decide what are reasonable and non-discriminatory royalties under the notion of “ongoing royalties.”

The final chapter is a comparative analysis and critique. It is submitted that any court scrutinizing standards or patent pools should take as its point of departure the kind of market and standard to be analyzed. If the underlying market can only hold one standard, the horizontal result of that standard, i.e. the standard itself, falls outside the ambit of competition law: thus, it would be difficult to show anti-competitive effect.

The conclusion explains that, in academic writing at the end of the 1990s and beginning of the 2000s, the solutions that were presented for the problems of patent thickening, “anti-commons” and hold-up were generally two-fold. Either the intellectual property law solution was preferred or the solution was sought in contract law. The contractual solution was to facilitate the possibility of cooperation between patentees. The author writes that from a competition law perspective, the contractual solution now creates a cap to the liability under the liability solution. He acknowledges that intellectual property owners are presumably at less of an advantage than they were before the intellectual property laws were “beefed-up,” and that the requirements for obtaining patents were lower in the 1980s.



Athanase Popov, Standardization under EU Competition Rules and US Antitrust Laws – The Rise and Limits of Self-Regulation, Björn LUNDQVIST, December 2014, Concurrences Review N° 4-2014, Art. N° 69276, pp. 284-288

Editor Edward Elgar

Date 1 July 2014

Number of pages 480

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