Commission provides guidance on the creation of a licensing negotiation group in the automotive sector for the licensing of standard essential patents

This article is brought to you in association with the European Commission.

The European Commission has issued an informal guidance letter to provide antitrust guidance for the creation of a licensing negotiation group in the automotive sector (the Automotive Licensing Negotiation Group or ‘ALNG’) that would negotiate licences to use technologies covered by standard essential patents (‘SEPs’). With this guidance letter, the Commission aims to contribute to increasing the competitiveness of the EU’s automotive sector, as set out in the context of the Industrial Action Plan for the European Automotive sector put forward in March 2025.

This letter is issued at the same time as another one addressed to APM Terminals, (a global port terminal operator and unit of shipping group Maersk) regarding an agreement for the joint purchasing and setting of minimum technical specifications for container-handling equipment used in ports. These are the first guidance letters the Commission issued under the Notice on Informal Guidance of 2022. This Notice allows businesses to seek informal guidance from the Commission on the application of EU competition rules to novel or unresolved questions, helping them making an informed assessment of their agreements or unilateral practices.

The Commission considers that ALNG does not raise concerns under Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) to the extent that ALNG’s activities meet the following elements:

• ALNG negotiates licences for standards that are not specific to the automotive sector, and in respect of which the combined market share of the ALNG members does not exceed 15% of the total demand for the SEPs or standards concerned.
• ALNG is open to other interested companies in the automotive sector, both car manufacturers and component suppliers, to join if they wish.
• 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.

The Commission’s assessment

The European Commission assessed ALNG’s compliance with Article 101 TFEU based on the information provided by the applicants in their request.

The Commission concluded that, in view of the content and objectives of the proposed ALNG, including the safeguards foreseen in its operating rules, the ALNG does not restrict competition by object. The Commission also concluded that the ALNG is unlikely to have actual or potential restrictive effects on competition. This is because:

• It is unlikely that ALNG members have a combined market share that exceeds 15% of the total relevant demand on the purchasing market(s) (i.e., the upstream licensing market(s) for the relevant technology standards), as these technologies are used in many different sectors and for many different purposes, of which automotive manufacturing represents only one.
• Even if the combined market share of ALNG members in the selling market(s) (i.e., the downstream selling market(s) where ALNG members manufacture and sell vehicles and their components) is likely to be higher than 15%, the Commission considers that the ALNG is unlikely to lead to appreciable restrictive effects on competition in such market(s) because, amongst other reasons, the cost of licensing SEPs represents a very small proportion of the total cost of the downstream products.
• Finally, the Commission found that the ALNG aims to increase efficiency in the licensing of SEPs related to digital technologies, which is expected to contribute to Europe’s decarbonisation goals and to the transition to net-zero emissions by 2050, as set out in the European Commission’s Clean Industrial Deal.

Background

Standard essential patents (‘SEPs’) are patents that are required to implement a certain standard in a product, such as 4G, 5G or WiFi. As part of the standardisation process, SEP holders make a commitment to grant licences to use their SEPs under fair, reasonable and non-discriminatory terms as a condition of their patents being included in the standard.

In December 2024, Bayerische Motoren Werke Group AG (i.e. BMW), Mercedes Benz Group AG, thyssenkrupp AG and Volkswagen AG submitted a request for informal guidance under the revised Commission Notice on informal guidance relating to novel or unresolved questions concerning Articles 101 and 102 of the TFEU that arise in individual cases.

Licensing Negotiation Groups (‘LNG’) such as ALNG are a novel form of agreement, as – to the Commission’s knowledge – there are no LNGs operating in the EU. LNGs share some characteristics with joint purchasing arrangements – which are covered by Chapter 4 of the Commission’s Guidelines on Horizontal Cooperation Agreements. They have however some specificities, given that LNGs aim at licensing intellectual property rights, not purchasing goods and services. Currently, there is no specific guidance for LNGs under competition law.

The observations contained in the informal guidance letter do not apply directly to other licensing negotiation groups. The companies participating in such groups are responsible for self-assessing their compliance with Article 101 TFEU.

Article 101 of the TFEU prohibits agreements, decisions of associations of companies, and other restrictive business practices that may affect trade and prevent, restrict or distort competition within the Single Market. 

Regulation 1/2003 sets up an enforcement system for Articles 101 and 102 TFEU based on self-assessment, as businesses are generally well-placed to assess the legality of their actions.

However, Regulation 1/2003 allows the Commission to provide informal guidance to companies in cases presenting novel or unresolved questions for the application of the EU competition rules, in line with the Notice on Informal Guidance. A request for guidance does not create an entitlement to receive guidance, as that would be inconsistent with the self-assessment framework of Regulation 1/2003. Nonetheless, the Commission may provide such informal guidance concerning the interpretation of the EU competition rules in a written statement (guidance letter) where it considers it appropriate and subject to its enforcement priorities.

Under the Notice, guidance letters are intended to help companies carry out themselves an informed assessment of their agreements or unilateral practices. The relevant companies remain responsible for carrying out their own self-assessment of the applicability of the EU competition rules.

Guidance letters reflect the Commission’s observations on the facts presented by the applicants in the request and do not create any rights or obligations for the applicants or any third party. They are expressly conditioned on the accuracy and truthfulness of information provided by the applicants, and any material divergence from the information provided by the applicants will render the guidance letter inoperative. Guidance letters cannot prejudge the assessment of the same questions by the Court of Justice of the European Union.

The Commission will publish a non-confidential version of the guidance letter on its competition website, in the public case register under the case number AT.40979 as soon as any confidentiality issues have been resolved with the relevant companies.

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