Context: After the Bundeskartellamt (Federal Cartel Office of Germany) (June 14, 2024 ip fray article), the European Commission’s (EC) Directorate-General for Competition (DG COMP) issued a comfort letter to an Automotive Licensing Negotiation Group (ALNG) for standard-essential patents (SEPs) (July 9, 2025 ip fray article). The LNG topic was also brought up in other EU policy contexts, among them the forthcoming revision of the EC’s technology transfer guidelines.
What’s new: Today the EC launched a “public consultation on the draft revised Technology Transfer Block Exemption Regulation [TTBER] and Technology Transfer Guidelines [TTG]” (September 11, 2025 EC announcement). The Commission made draft versions available for stakeholders to coment on. The draft contains a section on LNGs, which comes with a set of criteria that constitute a safe harbor for LNGs. The most striking part is a passage that essentially says group boycott (collective hold-out) violates the bloc’s cartel laws, but for six months LNGs will get a free pass. The second-most puzzling idea is that LNGs are not under a hard disclosure obligation concerning their membership.
Direct impact: For now, nothing has been formally adopted, and it is possible that changes will result from stakeholder input. The ALNG will presumably not be authorized to engage in conduct that is not already supported by the comfort letter. But the EC may encourage the creation of LNGs in additional fields and industries, though ultimately the participants must proceed with caution because clearance by one or two jurisdictions does not immunize them against cartel law enforcement in any other.
Wider ramifications: The EC does not appear to give sufficient weight to the consideration that allowing buyers’ cartels in one context (patent licensing) threatens to weaken the prohibition of such cartels in general.
This is just our initial reaction, knowing that our audience includes a number of stakeholders on both sides of the debate who will want to participate in this consultation. We may follow up in the coming weeks with further analysis. For now, suffice it to highlight a few key issues.
Competition law regulates target markets, not countries of origin
Just like patents, competition rules pertain to a target market (in this case, the EU’s Single Market) as opposed to countries of origin of products, services or, if you will, cartels. That means the EC does not have the authority single-handedly to legalize forms of collaboration (or collusion) by EU-based companies if those players operate in other markets as well. Moreover, the affected patentees are from different countries anyway, with EU companies holding a very significant number of cellular SEPs, but ever fewer WiFI SEPs, for example.
For LNGs to replace bilateral and pool negotiations, it will take more than EU clearance. We will give further thought to what might happen in other geographies. A single significant market that declines to condone LNGs could prevent them from prospering. For example, two years ago the UK’s competition authority tried to block a $70B merger (Microsoft-ActivisionBlizzard) at a time when virtually the rest of the world had greenlighted it (in the U.S., in the form of a court ruling). The deal ultimately went through, but only based on concessions demanded by the UK regulator that were not limited to the UK market, and the delays resulted in incremeental costs amounting to (easily) a billion U.S. dollars. LNGs could find themselves in a similar situation (not necessarily in the UK, which just served as an example).
Group boycott for six months: but why would it end then?
Para. 326(e) of the draft guidance says the following:
“the members of the LNG do not engage in coordinated behaviour, including coordinated hold-outs, that has the object of limiting either the freedom of technology holders to decide whether or not to enter into or to terminate negotiations with the LNG, or the freedom of LNG members to negotiate and conclude agreements bilaterally with technology holders, without prejudice to the possibility for the LNG members to agree that they will not bilaterally negotiate or conclude technology transfer agreements with a technology holder during negotiations between that technology holder and the LNG, provided that the duration of such restriction does not exceed 6 months;” (emphasis added)
This needs to be thought through. Not only is it counterintuitive that behavior is unlawful but condoned during a certain window, but the question is also whether this is practical. Can hold-out really have a defined start and a defined end? In order to get SEP holders or SEP pools to negotiate, the LNG members already have an incentive to engage in hold-out (coordinated or not) to soften the licensor side’s stance. But let’s assume they don’t coordinate any initial hold-out. In that case the question is why coordinated hold-out that is tolerated for a six-month period would end just like an employee with a 9-to-5 mentality would go home at 5 PM. It does not appear realistic that a pattern of behavior would change as of a given date. They would be more careful about how they communicate, but they might not have to do so anymore.
Disclosure of membership
It is hard to imagine that any SEP holder or SEP pool would want to negotiate terms with an organization whose membership is not known. Para. 307(a) envisions “not requir[ing] the LNG to disclose systematically to the technology holder the identity of every member, in particular where the membership of the LNG changes frequently.” That is not only quite the opposite of the transparency focus the EC displayed in connection with the proposed (and withdrawn) SEP regulation but also appears otherworldly. In any event, it flies in the face of all the SEP ecosystem knows about FRAND. FRAND negotiations are impossible without knowing one’s counterparts.
We will give this more thought. We are sure stakeholders will. And we have a strong feeling that the EC should also do so. Some of the ideas are unworkable, and more thought must be given to unintended consequences.
We do not consider LNGs equivalent to pools, but we make all articles on collective-licensing initiatives of whatever kind available free of charge.