Officially liked: EU Commission endorses SEP licensing group and green procurement deal

From self-assessment to soft clearance

The EC’s comfort letters offer legal certainty to two initiatives: a joint licensing negotiation group (LNG) for SEPs in the automotive sector and a green procurement alliance for battery-powered port equipment. These mark the first application of the revised guidance framework introduced in 2022. The guidance mechanism allows for early engagement with the EC on novel or uncertain legal issues arising under Articles 101 and 102 TFEU.

ALNG assessment follows FCO footsteps

The Automotive Licensing Negotiation Group (ALNG) was formed by BMW, Mercedes-Benz, Volkswagen, and Thyssenkrupp. It aims to collectively negotiate SEP licences with major licensors of SEPs. For more background: On the side of the SEP holders, the formation of a patent pool is quite common – whereas there was great uncertainty with regard to the (il)legality of a group of potential licensees. This created an imbalance.

Before the EC’s comfort letter, the German Federal Cartel Office (FCO) had also reviewed the ALNG (see FCO press release of June 2024 here), with its greenlight however only extending to Germany. In line with the FCO’s view, the EC now states that the ALNG complies with Article 101 TFEU when it meets the following criteria:

• ALNG negotiates licences for standards that are not specific to the automotive sector and, therefore, combined market share of the ALNG members does not exceed 15% of the total demand for the SEPs or standards concerned (i.e. the purchasing market);
• ALNG is open to other interested companies in the automotive sector to join;
• Negotiations with ALNG are voluntary for SEP holders, meaning that SEP holders are free to enter into a negotiation and to terminate it at any time;
• Exchanges of information between ALNG members are limited to what is objectively necessary to conduct the joint licensing negotiations, and no commercially sensitive information is shared between members of ALNG.

These conditions mirror those set by the German FCO. With regard to the 15% market share, it is relevant to note that this concerns the upstream licensing market for non-automotive standards. Standards that are of interest here are e.g. 4G, 5G, or WiFi. These technologies are used in many different sectors, of which automotive represents only one. Unnamed EC officials have also indicated to the press that they do not rule out increasing the market share threshold to 20% in future assessments.

LNGs: The odd hybrid

The EC’s willingness to slightly more flexibility makes sense: While LNGs share some characteristics with joint purchasing arrangements, there are certain key differences to joint purchasing groups. LNG members do not purchase tangible goods or services, but seek licenses for technology rights that are essential for a standard. Their assessment requires greater specificity. So far, there is no specific guidance for LNGs under EU competition law.

Prior to these Guidance Letters, there has also been strong debate about the (il)legality of LNGs. While some think of them as buyer cartels, others view them as necessary balance for patent pools. It is therefore not surprising there has been heavy industry pushback by lobbying groups. For example, IP Europe, a lobbying group mainly comprising SEP holders, has criticised the ALNG model as such, fearing that buyer coordination could drive SEP royalties below competitive levels.

Soft comfort in uncertain times

It will be interesting to see whether LNGs will be included in the revised Technology Transfer Block Exemption Regulation (TTBER). The current TTBER and accompanying guidelines are under review, with expiry set for 30 April 2026. The Guidance Letter could therefore have been a means to tame the discussions regarding LNGs in times where the TTBER revision will still take some time and where also the EC’s goal for a bigger SEP regulation failed.

Further, the ALNG is – according to the EC – contributing to Europe's decarbonisation goals and to the transition to net-zero emissions by 2050. The second initiative shares the same goal as it relates to a green procurement agreement involving APM Terminals and other port operators for battery-electric container handling equipment. Both initiatives seen together make quite clear that the EC is willing to offer legal certainty where cooperations support EU priorities such as competitiveness, sustainability, and digitalisation. The letters were issued within 6–7 months, marking a notable acceleration in procedure. There is a good chance that similar comfort letters might also be issued for the defense sectors, critical raw materials, medicine and AI, as well as of course other ESG-related cooperation models.

Full texts of the comfort letters are not yet publicly available but are expected to be published in the EC’s case database.

Authored by Elena Wiese and Anne-Kathrin Lauer.