Standard setting abuse: The case for antitrust control

Standards reduce production costs and increase the value of products to consumers; ultimately they significantly contribute to economic development. Standards however entail risks of anti-competitive abuse. After the adoption of a standard, the elimination of competition between technologies can lead to consumer harm. Fair, reasonable, non-discriminatory (FRAND) commitments made by patent holders have been used to mitigate that risk. The European Commission recognises the importance of standards, but European Union competition policy is still seeking to identify well-targeted and efficient enforcement rules. This Policy Brief identifies and discusses the main sources of direct harm to European consumers that can arise as a consequence of standardisation. Harm can occur through too-high prices for consumers, but can also be incurred if incentives to innovate are undermined. A consistent policy by the European Commission capable of tackling all sources of harm should simply be based on Article 102 of the Treaty on the Functioning of the European Union regardless of whether FRAND commitments are given. Antitrust enforcement should hinge on the identification of a distortion in the bargaining process around technology access prices, if it can be shown that the distortion is determined by the adoption of the standard and is not attributable to the pro-competitive merits of any of the involved parties.