Royalty Free standardization -The Pro-Competitive Solution in Public Procurement of ICT?

Abstract: The Commission’s decision to utilize FRAND as the Union’s premiere IPR licensing form in ICT standardization has sparked a debate among policy makers and stakeholders in the software industry regarding which licensing form is best suited for interoperability software standards in public procurement. Several voices from within the ICT industry as well as public authorities have openly supported the use of a royalty-free (RF) requirement for interoperability standards as being the more adapt option for the task at hand; to create interoperability and promote innovation and competition. This raises the question; which licensing approach would be better from a Competition Law perspective? The intention of this thesis and its research is to find the answer to that question through investigating whether or not a restriction in the form of a RF requirement in Article 13 of Regulation 1025/2012 would fulfill the four cumulative conditions in Article 101(3) TFEU and thus be considered pro-competitive. The four conditions are that the restriction produces “efficiencies”, that the consumer receives their “fair share” of those efficiencies, that there is an “indispensability of the restriction” and that the restriction doesn’t allow “elimination of competition”. For these conditions to be fulfilled in the relative context several factors need to be considered, such as technological and economical aspects of using RF or FRAND technologies, the status of the different relevant software markets and the situation regarding ICT procurement in different Stated within the Union. The investigation is focused on how these technical and economic aspects meet with the legal demands in EU law. This thesis makes the argument that based on the unique qualities of the interoperability software industry in combination with the current situation in public ICT procurement and the objectives of European standardization, such a RF requirement that is discussed in this thesis would be considered as pro-competitive and consequently the more adapt solution for interoperability standardization.