Abusive Pricing in an IP Licensing Context: An EC Competition Law Analysis

Interoperability, Competition Policy and Antitrust and Standards

Article Snapshot

Author(s)

Damien Geradin

Source

TILEC Discussion Paper: prepared for the 12th EU Competition Law and Policy Workshop: A Reformed Approach to Article 82 EC, European University Institute, Florence, June 8-9, 2007

Summary

This paper looks at how European regulators decide competition policy cases involving intellectual property licensing.

Policy Relevance

There is no strong evidence that firms charge too much when licensing IP. Trying to limit these rates will reduce investment and innovation.

Main Points

  • Patent and copyright holders often license rights to others in exchange for payment. Some producers must have a license to comply with technical standards, and might ask competition authorities to intervene, fearing high rates.

  • In Europe, Article 82 allows intervention only when prices are set by a dominant firm.

  • Restricting prices a firm can charge for its intellectual property could reduce innovation; even firms that must innovate can wait and adopt others’ technology.

  • Deciding that a price is unfair because it is higher than ongoing production cost will dry up investment. Using historical cost, geography, or competitors’ prices as benchmarks will not work well when technology is unique, traded globally, and changes fast.

  • Standard-setting organizations ask firms to license their intellectual property at fair and reasonable prices (FRAND); evidence fails to show that these prices are too high.

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