By Yoon Ja-young
Microsoft (MS) will not raise smartphone patent fees for its competitors. This is part of the provisions MS agreed to in getting approval from the Fair Trade Commission (FTC) for its acquisition of Nokia’s mobile business.
MS signed the deal to acquire Nokia’s mobile business in September 2013, and reported it to the FTC after two months. Through this “vertical integration,” MS now has the means to manufacture smartphones.
However, there was concern that the merger could hamper market competition. MS holds numerous patents essential for the mobile operating system (OS) _ some are used in the Android OS. It means MS can raise patent fees for its competitors in the handset market such as Samsung Electronics and LG Electronics, hampering fair competition in the market.
To dismiss such concerns, MS applied for a consent order in August. A consent order is when a business proposes measures to prevent unfair practices to get FTC approval on a deal.
The provisions were prepared reflecting the ideas of the FTC and are posted on the FTC website, www.ftc.go.kr. Any party that is affected by the merger is encouraged to give feedback by June 27. The FTC determines whether the provisions are adequate after hearing from those interested parties.
In the provisions, MS agreed that it will stick to the principle of “FRAND” for standard essential patents (SEP). FRAND stands for fair, reasonable and non-discriminatory provision of patents.
For non-SEPs, it will not raise patent fees for smartphone and tablet manufacturers.
Even when a Korean manufacturer has infringed on the patent of MS, it agreed not to ban sales or imports if the manufacturer engages in a sincere negotiation over a license.
The FTC said that antitrust regulators in other countries, including China and Taiwan, also gave conditional approval to the MS-Nokia deal, with concerns over MS abusing its patents.
“In preparing the provisions, we focused on tackling the issues that could potentially hamper competition,” said Sun Joong-kyu, an official in charge of the corporate merger at the FTC.