A FRAND Regime for Dominant Digital Platforms

• Author: Mathew Heim - Igor Nikolic
• Position: Mathew Heim, Tanfield Chambers, is also Senior Adviser to 4iP Council. Dr. - Igor Nikolic is Assistant Professor at Tilburg University. This paper was drafted with the support of 4iP Council and expands on a scoping paper submitted to the European Commission on Sept. 29th, 2018 by 4iP Council entitled A FRAND regime for dominant digital...
• Pages: 38-55

2019

Mathew Heim and Igor Nikolic

38

1

A FRAND Regime for Dominant

Digital Platforms

by Mathew Heim and Igor Nikolic*

© 2019 Mathew Heim and Igor Nikolic

Everybody may disseminate this ar ticle by electronic m eans and make it available for downloa d under the terms and

conditions of the Digital P eer Publishing Licence (DPPL). A copy of the license text may be obtain ed at http://nbn-resolving.

de/urn:nbn:de:0009-dppl-v3-en8.

Recommended citation: Mathe w Heim and Igor Nikolic, A FRAND Regime fo r Dominant Digital Platf orms, 10 (2019) JIPITEC

38 para 1.

innovate. The paper shows that, beyond the applica-

tion of FRAND in the competition law context, the Eu-

ropean Union institutions have consistently used the

FRAND regime to ensure access to critical infrastruc-

ture or inputs. The FRAND regime has been applied

in EU legislation such as standardisation, chemicals,

electronic communications framework, public sector

information, research framework, vehicles emissions,

payment services, credit rating agencies and bench-

mark regulations. It has proved itself to be a flexible

and pragmatic tool, able to apply to different market

dynamics and bottlenecks. Drawing out the common

elements of this European FRAND access regime, the

paper considers how it could be applied as a regula-

tory solution for dominant digital platforms.

Abstract: Dominant digital platforms are un-

der increased scrutiny by regulators around the world,

notably competition authorities. Much of the discus-

sion focuses on market access and contestability.

However, many doubt whether traditional competi-

tion law enforcement can, by itself, be an adequate

solution to the challenges posed by dominant digi-

tal platforms. Instead, a broader regulatory solution

could be devised to ensure effective competition and

to provide access to critical platforms or access to

data. On the premises that regulation is warranted,

this paper considers whether a Fair, Reasonable and

Non-Discriminatory (FRAND) access regime could

be a solution to ensure effective competition, while

maintaining the incentives of dominant platforms to

A. Introduction

1 The European Commission is considering what role

competition policy may play in addressing concerns

linked to the market power of digital platforms.1 The

question is apposite, given that digital platforms

* Mathew Heim, Taneld Chambers, is also Senior Adviser to

4iP Council. Dr. Igor Nikolic is Assistant Professor at Tilburg

University. This paper was drafted with the support of 4iP

Council and expands on a scoping paper submitted to the

European Commission on Sept. 29th, 2018 by 4iP Council

entitled A FRAND regime for dominant digital platforms?

Contribution by 4iP Council to the European Commission’s

workshop on Shaping Competition Policy in the Era of Digitisation.

The opinions expressed in this paper are those of the

authors and do not necessarily represent the opinions of

4iPCouncil nor its members.

1 See .

can grow – and have grown – to signicant scale

and their market position, exacerbated by network

effects, may soon appear unassailable. The impact

of dominant digital platforms can also be felt on

adjacent and downstream markets, whether as a

result of multi-sided markets or possible leveraging.

Yet applying traditional competition law doctrines

to evolving technology markets raises a host of

challenges for regulators.

2 In addition to more “classic” competition concerns,

new issues, not traditionally within the competition

policy space, are increasingly being voiced. These

issues include the following: the importance of data

as the fuel of the new economy; privacy and data

protection; media plurality; and democratic health

or the like.

Keywords: Access; competition law; data sharing; digital platforms; digital single market; FRAND; interoperability

A FRAND Regime for Dominant Digital Platforms

2019

39

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3 At the same time, the European Commission is also

considering how to build a strong European policy

that would leverage the data economy, articial

intelligence, the internet of things, blockchain and

other key enabling elements to Europe’s digital

future,

2

in which competition enforcement may play

a secondary role.3 Classic competition enforcement

is therefore but one of the tools available to

policymakers in addressing some of the issues raised

by dominant digital platforms.

4

This paper explores how European policy and

legislation has addressed issues of access to critical

goods or services in the past, in order to provide

inspiration to the ongoing debate.

B. Summary

5

This paper reviews some of the practices of the

European Union (EU) institutions when seeking to

ensure access to critical infrastructure or inputs,

whether through enforcement or regulation, and

which can serve as inspiration to the European

Commission in considering how to address dominant

digital platforms. We focus on one particular access

regime, that can be set up either ex ante or applied

as an ex post remedial solution in order to enable

fair-trading conditions between digital platforms

and users. Ensuring trading between a dominant

digital platform and others on Fair, Reasonable and

Non-Discriminatory (FRAND) basis might be a very

useful option, given that FRAND is a commonplace,

exible and proven mechanism that is relied on in

both commercial agreements and regulation.

6

This paper starts from the position that dominant

digital platforms will likely face regulation in one

form or another.

4

The aim of the paper is to show

2 See European Commission, Building a European Data Economy

(Communication) COM (2017) 9 nal; European Commission,

Towards a common European data space (Communication)

COM (2018) 232 nal; European Commission, Proposal for

a Regulation of the European Parliament and of the Council on

promoting fairness and transparency for business users of online

intermediation services (Communication) COM (2018) 238

nal 2018/0112 (COD); European Commission, Articial

Intelligence for Europe (Communication) COM(2018) 237

nal. See also Begona Otero, Evaluating the EC Private Data

Sharing Principles: Setting a Mantra for Articial Intelligence

Nirvana?, 4iP Council, December 2018. Available at: <https://

www.4ipcouncil.com/application/les/8315/4394/1658/

Evaluating_the_EC_Private_Data_Sharing_Principles.pdf>.

3 For example, in its Proposal for an online intermediation services

Regulation the European Commission acknowledges a lacuna

in addressing “unilateral potentially harmful trading

practices” by digital platforms that are not necessarily

competition law infringements and which European

competition law may therefore not address.

4 As Cremer put it, “Given their societal importance, there

will be strong regulations of platforms”. See Jacques

that, on that assumption, the FRAND access regime

has shown itself to be a exible tool for managing

platforms and could be applied as a safe harbour or

a regulatory solution to dominant digital platforms.

7 The paper is structured as follows. We rst review

competition law issues surrounding the conduct

of dominant digital platforms. Second, we look

at the applicability of FRAND access principles in

relevant competition cases. We then review the

FRAND access concept applied in some key EU

legislation governing standardisation; chemicals;

electronic communications framework; public

sector information; research framework; vehicles

emissions, payment services; credit rating agencies

and benchmark regulations. This is not a forensic

review of European FRAND-based legislation but

seeks instead to capture the principal examples

thereof. Finally, we summarise some of the essential

elements of the European FRAND regime before

concluding.

C. Issues surrounding the

application of competition law

in regulating the conduct of

dominant digital platforms

8

How to assess the effects of dominant digital

platforms on competition and what, if anything,

should be done is subject to an ongoing debate in the

literature and policy circles.

5

The fundamental issue

is that dominant digital platforms effectively create

an ecosystem lock-in. This may be either because

competition is often “for” the market not “on” the

market, or because the platform functions as de

facto gatekeeper to an ecosystem, pulling in service

or content suppliers, intermediaries, customers or

consumers.6

Cremer presentation at ICLE/University of Leeds

Annual Competition Law Conference 25 October 2018,

Washington DC.

5 For example, the US Federal Trade Commission is currently

looking at “the identication and measurement of market

power and entry barriers, and the evaluation of collusive,

exclusionary, or predatory conduct or conduct that violates

the consumer protection statutes enforced by the FTC, in

markets featuring “platform” businesses.” See

www.ftc.gov/news-events/press-releases/2018/06/ftc-

announces-hearings-competition-consumer-protection-

21st>. See also the inquiry by the Australian Competition

and Consumer Commission into the market power of digital

platforms e.g. <https://www.accc.gov.au/focus-areas/

inquiries/digital-platforms-inquiry>. See also Khan, Lina,

Amazon’s Antitrust Paradox (January 31, 2017). Yale Law

Journal, Vol. 126, 2017.

6 See US Senator Mark Werner’s observation regard: “certain

technologies serve as critical, enabling inputs to wider

technology ecosystems, such that control over them can be

leveraged by a dominant provider to extract unfair terms

2019

Mathew Heim and Igor Nikolic

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9

Where the platform’s role is central to the ecosystem

and certain players are locked-in, the market

position of a platform may be practically impossible

to challenge. Nevertheless the question remains

whether new players or new ecosystems can create

effective competitive constraints on the platform

or whether some competitive pressure needs to be

maintained through regulation, in order to ensure

that actors within the ecosystem have access to

critical elements of the platform, especially to enable

continued competition in secondary or associated

markets.

10

Regulators around the world face a challenge to

create a satisfactory framework to ensure fair

access of consumers and users to digital platforms

supporting an environment for innovation and

competition in dynamic markets. After many

years of exploration, including some enforcement

decisions, there is no consensus on some critical

issues, ranging from simple taxonomy, to the more

complex issue of market denition; tipping points

that connote-market power; the extent dominant

platforms can distort competition; the welfare

costs of intervention; or the difculty of designing

effective ex post remedies.7 Enforcers continue to face

difculties in tting classic competition analysis to

this paradigm, yet as noted by Coyle “… without a

greater degree of consensus about how to analyze

competition in digital platform markets, including

methodologies for empirical assessment, it will be

impossible for the relevant authorities or courts to

do anything other than feel their way along on a

case by case basis”.8

11

Is the existing competition assessment toolkit

sufcient to catch abusive “dominant” digital

platforms or does it need to be expanded? Tirole

notes “With rapidly changing technologies and

globalization, traditional regulatory tools have

become less effective, causing competition policy

to lag” and “Policymakers and regulators around the

world must face the fact that the reasoning behind

traditional competition measures is no longer valid”.9

from, or otherwise disadvantage, third parties”. See White

Paper, Potential Policy Proposals for Regulation of Social Media

Technology Firms (2018) available at: <https://regmedia.

co.uk/2018/07/30/warner_social_media_proposal.pdf>.

7 See Melamed, Doug and Petit, Nicolas, The Misguided

Assault on the Consumer Welfare Standard in the Age of Platform

Markets (October 30, 2018) Available at SSRN: <https://ssrn.

com/abstract=3248140> or <http://dx.doi.org/10.2139/

ssrn.3248140> (reviewing the debate).

8 See Diane Coyle, Practical competition policy implications

of digital platforms, Bennett Institute for Public Policy

working paper no: 01/2018, March 2018. At

www.bennettinstitute.cam.ac.uk/media/uploads/les/

Practical_competition_policy_tools_for_digital_platforms.

pdf>.

9 See Jean Tirole, Regulating the disrupters, Livemint, 1

January 2019 at

Coyle suggests that rather than focusing on prices

and consumer switching behaviour or traditional

market denition, antitrust authorities should

favour a wider assessment of the platform’s market

ecosystem, focusing “on the scope for disruptive

technological innovation and the dynamic consumer

benets of investment”.10 Yet others question calls

for a broadening of the consumer welfare standard.

As Melamed & Petit note: “Unless critics intend

to make antitrust law a general tool for attacking

all sorts of inequalities in size, power and wealth

unrelated to market competition, they will not be

able to improve antitrust law by abandoning the

[consumer welfare] standard in platform markets

in particular and across industries in general.”11 To

borrow a phrase from Fox, this debate is nothing

less than a battle for the soul of competition law.12

12

Another aspect is whether the competition law

system is able to play a part in addressing societal

concerns created by supra-dominant platforms

which, through their sheer size, have such a seismic

impact on whole economies and even democracies.

Should the “bigness” of the handful of “mega”

platforms even be a concern of competition law?

Should the standard of consumer welfare be

expanded beyond the “classic” consumer to capture,

for example, the individual as a data subject, as an

employee or even a voter? Should data (or subset

thereof) be considered an essential input, or should

some dominant platforms be considered an essential

facility?

13

If current competition law approaches contain

inadequacies in addressing problems associated

with dominant digital platforms, some suggest that

legislation could be used to dene new thresholds

(e.g. user base, size, lock in) above which “certain

core functions/platforms/apps would constitute

‘essential facilities’, requiring a platform to provide

third party access on fair, reasonable and non-

discriminatory (FRAND) terms and preventing

platforms from engaging in self-dealing or

preferential conduct”.

13

In addition, legislation or

regulation could ensure access to critical technology

by requiring that dominant platforms maintain

XsgWUgy9tR4uaoME7xtITI/Regulating-the-disrupters-

Jean-Tirole.html>.

10 Coyle (2018), p 12. See footnote 9. See also Bamberger,

Kenneth A. and Lobel, Orly, Platform Market Power (November

20, 2017). 32 Berkeley Technology Law Journal 1051 (2017);

San Diego Legal Studies Paper No. 17-311; UC Berkeley

Public Law Research Paper. Available at SSRN: <https://

ssrn.com/abstract=3074717>.

11 Melamed & Petit (2018), p 42. See footnote 7.

12 Eleanor M. Fox, The Battle for the Soul of Antitrust, 75 Calif. L.

Rev. 917 (1987).

13 Senator Mark Werner, White Paper, Potential Policy Proposals

for Regulation of Social Media Technology Firms (2018). See

Footnote 7.

A FRAND Regime for Dominant Digital Platforms

2019

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Application Programming Interfaces (APIs) for third

party access, thus achieving interoperability, under

FRAND terms. However, even some who argue that

the consumer welfare standard should be broaden

acknowledge that competition law should not be

used to make every successful platform a utility.14

14 It should be unnecessary to consider the “essential

facilities” doctrines broadly. In elaborating coherent

rules for emerging platforms that may reach a

tipping point (and be conferred with the special

responsibility that comes with market power), ex

ante “remedies” can be devised to ensure that lock

in does not occur. The issue only really arises when

considering what should be done with existing

“mega-platforms” and whether, after recognising a

problem, a remedy can be fashioned that addresses

various tensions of proportionality, effectiveness, as

well as practicality, that are rooted in commercial

reality.

15

This paper therefore explores existing practices

relating to FRAND access in European law and

policy as a possible practical framework to address

situations where digital platforms are either found

to be dominant or where platforms may wish, ex

ante, to adopt a reasonable and pragmatic solution,

in order to avoid allegations of market power or its

abuse - and therefore forestall regulatory scrutiny.

16

The next sections will describe and analyse the

applicability of FRAND access framework in EU

competition law and legislation.

D. FRAND in the Context of

Competition Law & Policy

I. Competition Policy and FRAND

17

The concept of “fair, reasonable and non-

discriminatory” access is increasingly used by

competition authorities as a “good faith” notion,

applied as a competition law remedy to ensure

the supply of a particular product or the access to

specic infrastructure.

15

In particular, FRAND access

14 Tim Wu, Taking Innovation Seriously: Antitrust Enforcement if

Innovation Mattered Most, (2012), Antitrust Law Journal No. 2.

15 For instance, in the context of the Microsoft case the

European Commission determined that Microsoft’s

operating system APIs was an essential input that Microsoft

could not abusively refuse to license and required a FRAND-

based access remedy. See also Case T-201/04, Microsoft v.

Commission, 2007 E.C.R. II-3601, para 193. See also paras.

808 et seq. and para. 1231 and 1261. Petit notes that “…

the 2018 Google Android case is a repeat of the 2004

Microsoft case, suggesting consistent support to the idea

of keeping technology platforms open”. See Petit, Nicolas,

Competition Cases Involving Platforms: Lessons from

remedies in competition cases have been used in

both abuse of dominance and merger review cases

and across a range of sectors.

18

From a theoretical perspective, it could be argued that

Article 102 TFEU already embraces a FRAND-based

notion; it eschews excessive prices16 while promoting

access and non-discrimination obligations,17 as

required under the “special responsibility” of

dominant rms.18 FRAND-based access remedies

have been used in Article 102 TFEU compulsory

licensing cases,19 yet this does not mean that a

compulsory licensing remedy should be broadly

imposed on dominant digital platforms (unless

exceptional circumstances can be established). We

will see that European competition law already has

some experience in applying FRAND-based access

remedies, where the European Commission has

sought to ensure market access but did not want to

engage in setting precise prices or terms.20

Europe (October 17, 2018). Available at SSRN: <https://ssrn.

com/abstract=3285277>), p.5.

16 A non-FRAND rate under the terms of contract law or as

a regulatory solution cannot be automatically equated

to exploitative abuse under competition law, which is of

a higher threshold. See for example Case M.7995 Deutsche

Borse/London Stock Exchange Group, para 106.

17 Article 102(c) TFEU. See also Melamed & Petit (2018). See

footnote 7.

18 On special responsibilities of dominant rms see Case

322/81 Nederlandsche Banden Industrie Michelin (Michelin I)

v Commission [1983] ECR 3461, paragraph 57; Case T-83/91

Tetra Pak v Commission (Tetra Pak II) [1993] ECR II-755,

paragraph 114; Case T-111/96 ITT Promedia v Commission

[1998] ECR II-2937, paragraph 139; Case T-228/97 Irish

Sugar v Commission [1999] ECR II-2969, paragraph 112; and

Case T-203/01 Michelin v Commission (Michelin II) [2003] ECR

II-4071, paragraph 97. CaseC-209/10 Post Danmark A/S v

Konkurrencerådet, EU:C:2012:172, paragraphs 21-23.

19 See e.g. Joined cases C-241/91 P and C-242/91 P, RTE & ITP v

Commission [1995] ECR I-743, Case 418/01, IMS Health v NDC

Health, [2004] ECR I-5039 and Case T-201/04, Microsoft Corp.

v Commission, [2007] ECR II-3601. See for example European

Commission decision of 21 December 1988 in case IV/31851

Magill TV Guide, para 27: “Accordingly the only remedy

possible in the present case is to require ITP, BBC and RTE

to supply each other and third parties on request and on

a non-discriminatory basis with their individual advance

weekly programme listings and to permit reproduction of

those listings by such parties .... If they choose to supply and

permit reproduction of the listings by means of licenses,

any royalties requested by ITP, BBC and RTE should be

reasonable”.

20 FRAND competition remedies, like all regulatory measures,

should also satisfy the principle of proportionality (See for

example Case C-180/96 United Kingdom v Commission,

I2265, para 96). Given that the FRAND regime is based on

fairness and reasonableness, that it adopts commercial

practices and imposes obligations of good faith on all

parties, it is likely that the FRAND regime is limited to what

is needed to address concerns, is the least onerous measure,

and is proportionate to the aim envisaged. See also Cyril

Ritter, How Far Can the Commission Go When Imposing Remedies

for Antitrust Infringements?, Journal of European Competition

Law & Practice, 2016.

2019

Mathew Heim and Igor Nikolic

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19

There have now been a number of merger review

cases in Europe where parties have agreed to adopt

a FRAND-based behavioural remedy to ensure that

existing market players or new entrants are placed

in a position where they can effectively compete

with the merged company.21 The FRAND access

remedy has been qualied as an “appropriate

benchmark”22 in a merger review and applied by

different jurisdictions across diverse sectors, such

as medical equipment, television broadcasting,

music streaming licensing, payment processing, gas

networks, ight search, missile systems, technology

platforms and herbicides.

23

Lessons can therefore

be drawn from cases where FRAND-based remedies

have been accepted to address input foreclosure

concerns by ensuring access to critical “must

have” inputs (considered essential for third parties

to compete effectively with the merged entity),

including ensuring that customers are supplied on

the same or similar terms to the merged entity’s own

business.

20 European competition authorities have specically

addressed the issue of ensuring interoperability

between device interfaces or communications

protocols, associated software and data management

systems. In Newscorp/Telepiù access to platform

APIs was ensured on FRAND terms, so far as was

necessary to allow downstream pay-TV providers

to develop interactive services compatible with

21 The European Commission is by no means alone in its

reliance on the FRAND principle in merger remedies.

Competition authorities around the world are increasingly

accepting FRAND-based remedies in a merger context

including the US Department of Justice review of Google/

ITA (2011), the US FTC review of Northrop Grumman/Orbital

(2018), the decision of the Competition Commission of India

and of MOFCOM of China in Bayer/Monsanto (2018), the

decision of the South African Competition Tribunal in Dow/

DuPont (2017) and the Japan FTC in ASML/Cymer (2012).

22 See Liberty Global/De Vijver Media, COMP/M.7194 (2015), para.

655. “…[T]he Commission considers that the reference

to ‘fair, reasonable and non-discriminatory terms’ is the

most appropriate benchmark to for the terms to which

various types of TV distributors will be entitled under the

commitments”. See also paras. 624-5, and 672.

23 See cases referred to in footnotes 22, 23, 25-27. See also

PRSfM/STIM/GEMA COMP/M.6800. where the joint venture

partners agreed that the joint venture would offer key

copyright administration services to other collecting

societies on FRAND terms, when compared to the terms

offered to the individual members of the joint venture. Also,

access to physical infrastructure have been assessed as an

essential input in: Hellenic Petroleum/British Petroleum

Hellas SA, HCC 465/VΙ /2009. The Hellenic Competition

Commission (HCC) imposed a FRAND commitment on

Hellenic Petroleum (ELPE) whereby ELPE would grant

access to third parties (wholesalers) to its storage facilities/

depots in Crete under FRAND terms. See also Contribution of

Greece to the Roundtable on Remedies in Merger Cases held by the

OECD’s Competition Committee (Working Party No.3 on Co-

operation and Enforcement), June 2011. DAF COMP(2013)11,

30 July 2012.

the decoders and software used by the combined

entity’s platform’s customers.24 In Siemens/

Drägerwerk, royalty free FRAND commitments were

given to ensure continued interoperability between

medical equipment platforms and hospital data

management systems, including making available

and maintaining all existing and future interfaces

and communications protocols.

25

In Worldline/Equens

the merging parties agreed to license on FRAND

terms to payment network service providers (NSPs)

within Germany key card and payment processing

software, as well as the source code for the Poseidon

software and the ZVT protocol, on which most

German point of sale terminals run.26

21

It is worth noting that in Worldline/Equens, additional

“anking” commitments were offered to ensure

that the FRAND remedy was effective. These

include effectively capping software maintenance

fees for 10 years; ensuring additional costs (e.g.

maintenance services were also under FRAND

terms); that NSPs’ access would be prioritised over

Worldline’s PaySquare in case of shortage; including

new modules and upgrades at no additional cost;

that NSPs would have access to Poseidon source

code for internal business use, in return for a one-

off price-regulated fee; to place governance of the

ZVT protocol with an external, independent not-

for-prot, entity that would represent all market

participants; that the Licensing Trustee would have

access to all of Worldline licenses, contracts, pricing

and invoicing conditions enabling it to effectively

review the commitments, and that NSPs could seek

more favourable terms if the Licensing Trustee

considered PaySquare had advantageous terms; and

set up a fast-track dispute resolution mechanism.

Finally, as a compliance tool, a material breach of

the remedies would result in NSPs having access to

the source code free of charge.27

22 The Newscorp/Telepiù remedy is also worth further

comment. During the Commission’s investigation,

third parties expressed concerns that the applicable

European regulatory framework, which required

those operators to offer access of digital television

services on a FRAND basis to all broadcasters,

28

might

not be sufcient to constrain likely foreclosure

by Newscorp in the Italian pay-TV market.29 The

24 Newscorp/Telepiù, COMP/M.2876 (2004).

25 Siemens/Drägerwerk, COMP/M.2861 (2013), para 154.

26 Worldline/Equens, COMP/M.7873 (2016). See also

europa.eu/rapid/press-release_IP-16-1462_en.htm>.

27 See also Paul McGeown, EU Merger Control 2016: Behavioral

Remedies, No Longer Taboo, The Antitrust Report, LexisNexis,

May 2017.

28 Notably the implementation of then Directive 95/47/EC,

the Directive on Television Transmission Standards, and

Directive 2002/19/EC, the old ‘Access Directive’ (see Section

V.(f) below).

29 Newscorp/Telepiù, para 121 identifying specic concerns

A FRAND Regime for Dominant Digital Platforms

2019

43

1

European Commission found that cooperation

with and by Newcorp or its subsidiary, NDS, was

critical to enter the Italian pay-TV market. Most

interestingly, the European Commission found30 that

given the technical difculties for pay-TV operators

both using a different CAS to NDS or implementing

Simulcrypt obligations within a short period of

time, it created a complete dependence on the

combined entity from the technological viewpoint.

31

Newscorp’s control of the technical platform would

give it the possibility and the incentive to set the

standard for the accepted level of “intra-platform”

competition. The European Commission therefore

imposed measures to effectively compel Newscorp

to comply with the existing FRAND rules found

within the legislative framework. In that context,

while a monitoring trustee was appointed to ensure

compliance with the remedies, disputes related to

the licensing terms fall to be adjudicated to the

Italian Communications Authority, the national

regulatory authority responsible for safeguarding

the implementation of the regulatory framework.

Newscorp/Telepiù therefore agreed to allow access

to the API so far as necessary to develop interactive

services compatible with the decoders used by the

Combined Platform’s customers.32

23

In sum, the FRAND regime has now been applied

by competition authorities in Europe (and indeed

further aeld) to ensure access to products and

services across a range of sectors. FRAND access

commitments have proved particularly useful and

are the least intrusive remedies, where there is

no adequate regulatory framework in place that

addresses underlying competitive concerns.33

24

Competition law can therefore continue to

ensure intra- and inter-platform competition by

promoting access to critical inputs using a tried-and-

tested regime that ensures a balance of interests,

regarding technical services for pay-TV, and in particular

conditional access systems being the likelihood that the

new entity grant access to the NDS technology for CAS to

potential new entrants under unfair terms and conditions;

and that the new entity obstruct the entry of alternative

pay-TV platforms with a different CAS system from that of

NDS, leading to a virtual monopoly, in view of the fact that

NDS would become the only CAS used in Italy.

30 Newscorp/Telepiù, para 140.

31 “A number of respondents in the market investigation

have gone as far as considering NDS technology as a sort

of ‘essential facility’ for the Italian pay-TV market”. See

Newscorp/Telepiù, para 124.

32 Newscorp/Telepiù Commitments, Part II, para 11.5.

33 FRAND remedies also address regulatory efciency

concerns as they are also self-policing, as a FRAND regime

grants a clear cause of action before the courts to third

parties harmed by exclusion or non-FRAND terms, as well

as possible ex post regulatory actions under Article 102

(and what that would imply for remedies for ndings of

exclusion).

guaranteeing equality of arms in negotiations,

minimising impact of regulatory intervention,

and basing remedies on existing sector practices.

Indeed, in setting out some lessons to be drawn

from European competition cases involving

platforms, Petit observes that while EU technology

policy is premised on ex ante regulation, antitrust

enforcement appears to effectively act as a “fact

nding exercise or as a regulatory kick starter

seconded by regulatory propositions, notably as

relates to online platform regulation.”34

25

Competition law policy is an important complement

to broader European policy measures, but

competition policy should not be primarily driven

through cases: such an approach has signicant

aws. First, imposing FRAND access as a merger

remedy is opportunistic and dependent upon

having a notiable merger to begin with. If there is

no relevant merger review where a FRAND access

regime can be considered, alternative instruments

should be considered to provide guidance to

undertakings. In any event, FRAND access remedies

would be merger-specic and could not necessarily

be applied as a universal solution to dominant

digital platforms across similar markets. The same

can be said for other competition enforcement

measures. Second, in non-merger cases, substantive

competition law investigations are inherently

slow. They typically last for several years during

which market developments may often render any

remedy too late to address pressing competitive

concerns. In addition, enforcement cases are also

fact-specic and companies under investigation

should be condent that their case will not be

“hijacked” for policy-making purposes. Finally, if

cases end up in commitment decisions, any FRAND

access remedy may provide little precedential value

for other companies. Consequently, competition

law remedies should be complemented by broader

policy measures. There is therefore something to be

said for a more structured competition approach to

FRAND, especially given the jurisprudence already

developed by the European Commission.

26

Competition law and national competition

authorities may have a role to play in providing

more structural guidance to companies. As

Tirole notes, “rapidly changing technologies and

globalization, traditional regulatory tools have

become less effective, causing competition policy

to lag”, which requires more agile policies to be

developed including “soft law” instruments.35 From

a competition perspective, formal guidance could

well be useful where platforms risk creating silos

34 See Petit (2018). See footnote 15.

35 See Jean Tirole, Regulating the disrupters, Livemint, 1

January 2019, at <https://www.livemint.com/Technology/

XsgWUgy9tR4uaoME7xtITI/Regulating-the-disrupters-

Jean-Tirole.html>.

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Mathew Heim and Igor Nikolic

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1

or proprietary ecosystems, locking out alternative

players. A good example relates to the connected

car, which will generate data of driver and passenger

behaviour and experiences, automotive diagnostics,

driving and road conditions that will feed into

services related to driving and linked services.

To what extent should the platforms controlling

the accessing of this data seek to avoid walled-

gardens or silos? While platforms should assess

the risk themselves, guidance from the European

Commission would be welcome if only to delineate

scope of action.36 There is sufcient jurisprudence

in European law for the European Commission to

provide guidelines on FRAND access regimes in

relation to dominant digital platforms. This would

not only help to ensure that binding access regimes

are adopted ex ante, but could provide guidance to

companies considering offering commitments to

address competition concerns under Article 9 of

Regulation 1/2003.

II. Competition Policy and

“Standardisation FRAND

27

Patents essential for practicing a technology

standard (Standard Essential Patents or SEPs) have

recently been in focus, regarding the applicability of

the EU’s competition law to access to these patents.

Technical standards can broadly be categorised as

collaborative, when they are developed within the

framework of Standard-Development Organisations

(SDO), or de facto, when they are developed outside

of any institutional framework of SDOs and achieve

broad market acceptance to effectively become a

standard on the market. Competition law in Europe

has taken a FRAND-based approach to essential

patents related to both collaborative and de facto

standards.

28

FRAND licensing commitments, in the context

of technical standards, are intended to ensure

widespread access to a standard for implementers

while, at the same time, providing adequate rewards

and incentives to technology developers. Although

FRAND commitments are voluntarily given by SEP

owners to SDOs, the European Commission views

that the existence of a FRAND policy will place the

SDOs, and their contributing members, within the

safe harbour of Article 101 TFEU.37 Complying with

36 See Wolfgang Kerber, Data Governance in Connected Cars:

The Problem of Access to In-Vehicle Data, 9 (2018) JIPITEC

310 para 1.

37 European Commission Guidelines on the applicability of Article

101 of the Treaty on the Functioning of the European Union to

horizontal co-operation agreements, (Communication) OJ C11,

14 January 2011. See para 279. In addition, the European

Commission’s Technology Transfer Guidelines go somewhat

further, suggesting that FRAND commitments should be

the FRAND safe harbour means that there is, in

principle, no need to undertake the often-complex

task of assessing market power or dominance of SEP

owners.

29 A FRAND commitment may also have an important

impact on the availability of injunctive relief which,

if granted by a court, may deny the infringer access

to that standard. In the Huawei v ZTE,38 the Court

of Justice of the EU (CJEU) considered whether a

SEP owner found to be dominant had abused that

dominant position where it sought an injunction

for the infringement of its SEP, to which a FRAND

commitment had been made. The Court held, amongst

other things, that a competition law defence could be

raised by an infringer of an SEP against a request for

an injunction, where a dominant SEP holder had not

followed certain steps, including making a FRAND

offer.39 Following those steps creates a safe harbour

for the SEP holder when requesting an injunction.

However, the Court also set out certain steps that the

infringer has to follow if they were to be able to avail

themselves of such a defence. As a result, the Court

set out a negotiating process that, where followed,

should lead to a FRAND outcome. What Huawei v ZTE

shows is that, in the event of a dispute, where both

parties follow the steps required of them, access on

a FRAND-basis is ensured and third parties are not

unduly excluded on the basis of proprietary rights.

It also shows, at a high level, that the Court built its

decision around the FRAND commitment.

30

In the context of de facto standards, the German

Bundesgerichtshof permitted a competition law

defence to be raised where a patent infringer was not

able to get a FRAND-like licence to a patent in a de

facto standard, even where a FRAND commitment had

not been made expressly or required by regulation.

40

included in patent pools’ self-assessment, whether or not

these pools were licensing SEPs.

38 See Huawei Technologies Co. Ltd v ZTE Corp., ZTE

Deutschland GmbH, Case C170/13, 16 July 2015, available

at <http://curia.europa.eu/juris/document/document.

jsf?docid=165911&doclang=en>.

39 See Huawei v ZTE para 54 of the CJEU ruling: “It follows that,

having regard to the legitimate expectations created, the

abusive nature of such a refusal may, in principle, be raised

in defence to actions for a prohibitory injunction or for the

recall of products. However, under Article 102 TFEU, the

proprietor of the patent is obliged only to grant a licence on

FRAND terms.”

40 On the facts before it, the court claried that the compulsory

licence defence against the request for injunctive relief was

only possible when the alleged infringer has made an offer

to the patent proprietor that the patent proprietor could

not reject without being anticompetitive, and behaves as

if the patent proprietor had already accepted his offer. See

Orange Book Standard, KZR 39/06, (Bundesgerichtshof—

BGH, May 6, 2009).

A FRAND Regime for Dominant Digital Platforms

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1

31

In conclusion, EU competition law promotes licensing

of SEPs on FRAND terms both by providing a safe

harbour under Article 101 TFEU to SDOs, which have

policies requiring FRAND commitments from their

members and by ensuring a balanced path, based

on good faith behaviour, to resolving SEP licensing

disputes that would result in a FRAND agreement.

E. European Legislation, Regulation,

Policies and FRAND

32

The notion of access on FRAND terms has also

been used by the European legislature well

beyond competition law. In pursuing public policy

objectives, FRAND-based access has been applied

across different sectors as a means of ensuring

that critical inputs are made available for market

participants. This creates a further useful source

of European authority for the contention that the

FRAND regimes is a suitable access remedy.

I. FRAND in the context of

Standardisation Regulation

33

As mentioned, FRAND is a widely used notion in

the context of licensing patents that are essential

to practicing a technology standard. The FRAND

commitment is voluntarily given by a technology

contributor to an SDO. At its highest level, the FRAND

commitment exists to ensure access to patented

essential technologies on terms that are fair and

reasonable for both licensor and licensee in order

to, rstly, guarantee the uptake of new technologies

and its wide diffusion, and secondly, encouraging

valuable technology contributions to be made to

standardisation efforts (thus encouraging further

incentives to innovate in future standardisation).41

The FRAND regime therefore seeks to balance

competing interests of different players and making

standardisation an attractive enterprise for all kinds

of business models. Depending on the jurisdiction,

a FRAND commitment is usually an enforceable

defence under contract law or other principles such

as quasi-contract, estoppel and in some instances

antitrust law.42

41 See the European Commission, Setting out the EU approach

to Standard Essential Patent (Communication), COM(2017)

712 nal, 29 November 2017. Moreover, SDOs typically

follow certain principles established by the World Trade

Organisation that ensure that an SDO is business neutral.

See more on the principles, such as openness, consensus

based, transparency, and impartiality at Fredrik Nilsson,

Appropriate base to determine a fair return on investment: A legal

and economic perspective on FRAND, GRUR Int. 2017, 1017.

42 National SEP litigation tends to focus mainly on non-

competition elements, see for example Huawei v. Unwired

Planet, [2017] EWHC711(Pat) and the Court of Appeal review

34

Standards are a typical example of the creation of an

innovation platform, done openly and transparently.

As Tsilikas noted: “Collaborative standardization

under the auspices of [SDOs] has, thus far, a

remarkable record of breakthrough technological

achievements, high-quality, cutting-edge standards,

vibrant follow-on innovation in the implementation

of standards and open, competitive upstream and

downstream markets. Standardization in wireless

telecommunications is driven by an inexorable

dynamic: more innovative standards, services and

products increase consumer demand and increased

consumer demand calls for more investment in

R&D, more innovation and better-performing

interoperability standards.”43

35

Core to that openness and transparency is the access

to essential technology through the FRAND regime.

The FRAND regime has empirically led to hugely

successful results, ensuring both broad access to

and wide dissemination of advanced technologies.44

36 What the precise rights and obligations are that the

FRAND regime creates depends on the intention of

the parties (usually set out in the SDO’s IPR policy) and

the specicities or usual practices of the particular

industry.

45

The exibility of the FRAND commitment

has led it to be broadly adopted by SDOs across

the board, notably the formal EU standardisation

of that decision [2018] EWCA Civ 2344 or the repository

of post-Huawei v ZTE national case law at

caselaw.4ipcouncil.com/>.

43 Tsilikas, Haris, Collaborative Standardization and Disruptive

Innovation: The Case of Wireless Telecommunication Standards

(May 17, 2016). Max Planck Institute for Innovation &

Competition Research Paper No. 16-06. Available at SSRN:

<https://ssrn.com/abstract=2783372>.

44 For example, between 2005 and 2013, the average mobile

subscriber cost per megabyte decreased 99 percent, mobile

network infrastructure costs were reduced by 95 percent,

and 4G networks were able to transfer data 12,000 times

faster than 2G networks. See Boston Consulting Group,

The Mobile Revolution, January 2015. According to GSMA

by 2025 5G networks are likely to cover one-third of the

world’s population. See more at <https://www.gsma.

com/futurenetworks/technology/understanding-5g/5g-

innovation/>.

45 There are international SDOs that do not use the exact

expression “FRAND” in their IPR policies yet achieve the

same result. SAE International, for example, is a US-based

organisation that, inter alia, develops voluntary consensus-

led standards covering aspects of design, construction,

performance, durability, and promotes for commercial

vehicle and automotive engineering. Within the context of

patents in SAE’s IPR policy, patents and patent applications

can be included provided that SAE receive either a general

disclaimer from the patent holder that they will not enforce

any of their IP against implementers or that they state that

“a license will be made available to all applicants without

compensation or under reasonable rates, with reasonable

terms and conditions that are demonstrably free of any

unfair discrimination.” See <https://www.sae.org/binaries/

content/assets/cm/content/about/sae-ip-policy.pdf>.

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Mathew Heim and Igor Nikolic

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1

bodies, ETSI and CEN/CENELEC, as well as numerous

informal standards organisations.46 As a result, this

industry-led solution has been enshrined in the

European Standardisation Regulation,

47

and broadly

promoted in European standardisation policy,48 as

part of the regulatory framework around standards

development and dissemination.

37 Indeed, the European Commission’s recent FinTech

Action Plan notes that that “An EU-wide FinTech

market will not reach its full potential without

the development of open standards that increase

competition, enhance interoperability and simplify

the exchange of and access to data between market

players”.49 Implementing such interoperability can

be done through ad hoc interfaces, which raises

efciency and competition issues, or interoperability

standards for the whole market on the basis of the

principles within the European Standardisation

Regulation which, as noted above, seeks to ensure

effective access through FRAND terms.

38 As a nal note, the negotiation framework devised

by the CJEU in Huawei v ZTE could provide inspiration

for other non-SDO situations. In Huawei v ZTE the

CJEU required the holder of the essential input to

set out clearly what the input consisted of as well

as its price, where upon the customer, having all

the elements necessary to take a decision, has

to accept to negotiate and diligently agree to the

offer or make a reasonable counter offer.50 Such a

46 Tim Pohlman, Knut Blind, Landscaping Study on Standard

Essential Patents (2016) p. 36 (nding that 68% of all declared

SEPs are licensed under FRAND terms, while the remaining

32% do not specify licensing conditions); Justus Baron &

Daniel Spulber Technology Standards and Standard Setting

Organisations: Introduction to the Searle Center Database (2018)

27 Journal of Economics & Management Strategy 462 (studying

IPR policies of 37 SSO and nd that 32 SSOs allow for FRAND

licensing, with the remaining 5 SSOs require royalty-free

licensing).

47 See the European Standardisation Regulation No 1025/2012,

25 October 2012, which seeks to create “an effective and

efcient standardisation system which provides a exible

and transparent platform for consensus building between all

participants” and requires that for technical specications

to fall under the Regulation they be covered by the FRAND

regime, reecting WTO norms.

48 See e.g. the European Commission, Intellectual Property

Rights and Standardization (COM(92) 445 nal), 27 October

1992; or the European Commission, Digitising European

Industry: Reaping the full benets of the Digital Single Market,

(Communication), COM(2016) 180 nal; or European

Commission, ICT Standardisation Priorities for the Digital

Single Market (Communication) COM(2016) 176 nal of 19

April 2016; or the European Commission, Setting out the

EU approach to Standard Essential Patents (Communication)

COM(2017) 712 nal, 29 November 2017.

49 European Commission, FinTech Action plan: For a more

competitive and innovative European nancial sector

(Communication), Brussels, 8.3.2018 COM(2018) 109 nal.

50 Claudia Tapia and Spyros Makris, Negotiating SEP licenses

in Europe after Huawei v ZTE: guidance from national

process is attractive as a policy solution, but it has

to be acknowledged that the system was devised

in the event of an inability by the parties to reach

agreement and on the basis that one party had

already committed to allow access to some of its

technologies on FRAND terms. It cannot be used as

a procedural straight jacket, as parties could well

reach agreement outside of such a process.51

II. The Regulation for the

Registration, Evaluation,

Authorisation and

Restriction of Chemicals

39

The Regulation for the Registration, Evaluation,

Authorisation and Restriction of Chemicals (REACH)52

creates a FRAND-like access framework for sharing

previously submitted reports and data between

companies. In particular, it creates a framework

whereby the holder of this critical information

(entities that have previously registered particular

chemicals) and a potential registrant “make every

effort to ensure that the costs of sharing the

information are determined in a fair, transparent

and non-discriminatory way”.53 It is notable that

REACH echoes a central tenet in Huawei v ZTE, where

the European Court imposes obligations on both

licensor and potential licensee to seek agreement

in good faith. REACH also provides for rules on cost-

sharing (notably where there is no agreement found

between the parties), as well as a dispute resolution

mechanism, while respecting access to courts.

40

In considering data sharing requirements, Drexl

notes that REACH contains certain features “that

could be used as guidance for similar legislation in

other elds”. 54 These include: (i) the public interest

courts, Managing Intellectual Property, May 2018.

Available at <https://www.4ipcouncil.com/application/

les/1315/3018/6300/21-29_article_SEPs.pdf>.

51 In Unwired Planet v. Huawei, the Court of Appeal found that

“We have come to the rm conclusion that the CJEU was not

laying down mandatory conditions at [70] of its judgment

such that non-compliance will render the proceedings

a breach of Article 102 TFEU...” [2018] EWCA Civ 2344,

para 269.

52 Regulation (EC) No 1907/2006 of the European Parliament

and of the Council of 18 December 2006 concerning the

Registration, Evaluation, Authorisation and Restriction

of Chemicals (REACH), establishing a European Chemicals

Agency, amending Directive 1999/45/EC and repealing

Council Regulation (EEC) No 793/93 and Commission

Regulation (EC) No 1488/94 as well as Council Directive

76/769/EEC and Commission Directives 91/155/EEC, 93/67/

EEC, 93/105/EC and 2000/21/EC (Text with EEA relevance).

53 See REACH Article 27(3) and 30(1).

54 Josef Drexl, Designing Competitive Markets for Industrial Data –

Between Propertisation and Access, 8 (2017) JIPITEC 257.

A FRAND Regime for Dominant Digital Platforms

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47

1

in creating the access regime; (ii) a framework of

contractual negotiations favouring “a pro-market

solution over direct government intervention”;

55

(iii)

a concrete base for calculating compensation, relying

on the cost for undertaking the relevant study; (iv)

a mechanism for dispute resolution “that enables

the public interest to prevail and that provides

sufcient legal certainty for the parties when they

assess whether it makes sense to depart from that

rule”.

56

One particularly interesting aspect in looking

to REACH as inspiration for FRAND-based access

regimes is that the public interest is broader than

ones that traditionally have resulted in compulsory

licensing regimes.

41

Further, as Drexl notes, the REACH framework relies

on bilateral commercial negotiations to determine

the conditions for a pro-competitive solution.57

While the REACH legislation does not engage in

price-setting, which is so difcult for a legislature

to get right, REACH does provide cost “metrics”

in the event that no agreement can be arrived at;

costs are limited to sharing the proportionate costs

of information necessary to satisfy registration

requirements.

58

Therefore legislation can provide

guideposts to the parties in the event of a dispute,

but the legislation need not get engaged in creating

value homogeneity. These metrics are, however,

specic to the scope of REACH related to the sharing

of scientic studies and data and so are generally not

applicable to other sectors.

III. European Electronic

Communications Code

42

The recently adopted European Electronic

Communications Code (EECC) provides updated

EU-wide telecommunication rules.59 It contains a

number of provisions providing for access to and

interconnection of electronic communication

networks on terms that are fair, reasonable and non-

55 Ibid. Drexl (2017), at para 180, also considers that a REACH-

like access regime could also be implemented in situation

where there is no additional public interest, arguing that

this “would make sense if it is devised as a non-mandatory

procedural framework for negotiations on access to

information” and considers that the negotiation framework

devised by the European Court in Huawei v ZTE “could

especially be applicable for cases in which the holder of

information publicly commits to grant access to data on

FRAND terms”.

56 Ibid. Drexl (2017), para 179.

57 Ibid. Drexl (2017), para 180.

58 See also the European Chemical Agency’s Guidance

on Data Sharing at

documents/10162/23036412/guidance_on_data_sharing_

en.pdf/545e4463-9e67-43f0-852f-35e70a8ead60>.

59 Directive (EU) 2018/1972 of 11 December 2018 establishing

the European Electronics Communication Code, L 321/36.

discriminatory, or similarly-phrased terms.

43

For instance, the EECC allows National Regulatory

Authorities (NRAs) to require operators to

interconnect their networks and make their services

interoperable;60 provide access to wiring and cables

facilities;

61

share passive infrastructure and conclude

localised roaming access agreements.62 Under all these

scenarios, access and interconnection conditions

must be objective, transparent, proportional and

non-discriminatory. While such conditions are not

further dened in the EECC and are to be further

elaborated by NCAs, they substantively resemble a

FRAND obligation.63

44 Moreover, in certain instances the EECC specically

allows NRAs to impose FRAND-based access

obligations. For example, NRAs may require access

on FRAND terms to cables and wiring beyond the

rst distribution point;64 access to relevant facilities

in order to ensure accessibility for end-users to

digital radio and television broadcasting services;65

and access to technical services enabling digitally-

transmitted services to be received by viewers or

listeners by means of decoders.66 Additionally,

holders of IP rights needed to access products and

systems should ensure that licences to manufacturers

of consumer equipment are on FRAND terms.67

45 Besides the above obligations that are applicable to

all operators, a specic regulatory regime applies to

operators found to have “signicant market power”

(SMP). Namely, NRAs may impose a number of

obligations on such operators, such as the obligation

of transparency, requiring operators to make public

their terms and conditions for interconnection

60 EECC, Article 61.2.

61 EECC, Article 61.3, which is applicable if it can be shown

that replicating these elements would be economically

inefcient or physically impracticable.

62 EECC, Article 61.4.

63 One question arises as to why these provisions apply FRAND-

like concepts of “objective, transparent, proportional

and non-discriminatory”, were as other sections of

the Directive adopt the express FRAND conditions and

whether these would be materially different. No reason

is immediately forthcoming, although one explanation is

that the term “objective, transparent, proportional and

non-discriminatory” appears to have been included in

the EEC, while FRAND wording was drawn from the old

Access Directive (Directive 2002/19/EC of the European

Parliament and of the Council of 7 March 2002 on access

to, and interconnection of, electronic communications

networks and associated facilities (Access Directive), OJ L

108, 24.4.2002, notably Recital 10, Article 5.1.b and Annex I,

Part I 2(b) and (c)).

64 EECC, Article 61.3 paragraph 2.

65 EECC, Article, 61.2.d.

66 EECC, Annex II.

67 Ibid.

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Mathew Heim and Igor Nikolic

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and access, including information on pricing;68 the

obligation of non-discrimination treatment of other

similarly situated companies;69 or even the direct

price control measures for interconnection and

access.70 The reasons for regulating operators with

SMP is to ensure ex ante competition is maintained,

when traditional ex post competition law remedies

may not be sufcient nor adequate to safeguard

effective competition in the telecommunications

market.

46

The EECC therefore contains FRAND-based access

regimes to networks, infrastructure and content. It is

primarily managed by NRAs, who are best placed to

assess the situation on the ground, given the nature

of the markets. These access regimes are imposed

in order to satisfy various public policy objectives,

including ensuring full end-user connectivity,

resolve infrastructure bottlenecks or safeguard ex

ante competition, as an adjunct to ad hoc competition

enforcement. The EECC thus shows that European

legislation does not shy away from mandating access

to critical infrastructure in order to satisfy broader

policy objectives.

47

Interestingly, the EECC also includes an obligation

to provide interoperability between “interpersonal

communication services”, which reach a signicant

level of coverage and user uptake.71 This provision

may arguably be used by NRAs to impose an obligation

on widely used communication applications or

social platforms to interoperate.72 However, such

regulatory interventions may be possible only where

end-to-end connectivity is endangered and only to

the extent necessary to ensure connectivity between

end-users.73 Nevertheless, this provision represents

an evolution in providing a regulatory solution to

ensuring interoperability between particular types

of platforms that have a signicant reach, though it

may not be dominant in the competition law sense.

The FRAND-based remedy is available to satisfy

the broad public interest objectives found in the

EECC, that include ensuring freedom of expression

and information, as well as media pluralism, access

to and take up of very high capacity networks

and promotion of competition in the provision of

electronic communications networks and associated

68 EECC, Article 69.

69 EECC, Article 70. See also Commission, ‘Recommendation

on Consistent Non-discrimination Obligations and Costing

Methodologies to Promote Competition and Enhance the

Broadband Investment Environment’ 2013/466/EU (guide

on interpreting the non-discrimination requirement in

electronic communications legal framework).

70 EECC, Article 74.

71 EECC, Article 61.2.c.

72 See Wolfgang Kerber, Heike Schweitzer, ‘Interoperability in

the Digital Economy’ (2017) 8 JIPITEC 39, 50-51.

73 EECC, Article 61.2.c.

facilities.74

IV. Public Sector Information Directive

48

Directive 2003/98/EC (amended by the Directive

2013/37/EU) on re-use of public sector information,

introduces FRAND-based access conditions to enable

access to such information.75 Rather than referring

expressly to the expression “fair, reasonable and

non-discriminatory”, the Directive eshes elements

to access public sector information including

reasonable remuneration, non-discriminatory

access and transparency, which are central elements

to FRAND-based regimes.

49

In detailing the conditions for access to public sector

information, the Directive sets out the following

FRAND-based elements:

•

Public sector bodies may charge fees for

supplying and allowing access to the information.

The principles governing charging under Article

6 note that “charges shall be limited to the

marginal costs incurred for their reproduction,

provision and dissemination”.76 However, the

marginal cost default does not apply where

public sector bodies are required to generate

revenue to cover a substantial part of their

costs relating to the performance of their public

tasks or, exceptionally, for documents for which

the public sector body is required to generate

sufcient revenue to cover a substantial part of

the costs relating to their collection, production,

reproduction and dissemination. Libraries,

including university libraries, museums and

archives are not bound by the marginal cost

default, in order not to hinder their normal

running.77

• Article 6 also sets out how total charges shall be

calculated “according to objective, transparent

and veriable criteria to be laid down by the

Member States. The total income of those

74 EECC, Article 3.

75 Directive 2003/98/EC of the European Parliament and of

the Council of 17 November 2003 on the re-use of public

sector information as amended by the Directive 2013/37/

EU of the European Parliament and of the Council of 26 June

2013, 2003L0098 (consolidated text) (PSI Directive). The PSI

Directive is currently under review and a proposal for new

directive has been made, see: Proposal for a Directive of

the European Parliament and of the Council on the re-use

of public sector information (recast) COM/2018/234 nal –

2018/0111 (COD).

76 See also Recital 22 of Directive 2013/37/EU. Recital 24 notes

that the upper limits for charges set in the Directive are

without prejudice to the right of Member States to apply

lower charges or indeed no charges at all.

77 See Recital 23 of Directive 2013/37/EU.

A FRAND Regime for Dominant Digital Platforms

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1

bodies from supplying and allowing re-use of

documents over the appropriate accounting

period shall not exceed the cost of collection,

production, reproduction and dissemination

[where relevant the preservation and rights

clearance], together with a reasonable return

on investment. Charges shall be calculated in

line with the accounting principles applicable

to the public sector bodies involved.”

Of note

is Recital 23 that acknowledges that, when

calculating a reasonable return on investment,

libraries, museums and archives can consider

the prices charged by the private sector for

the re-use of identical or similar documents.78

Given the specic context of public sector data,

the Directive can provide guide points on what

elements to consider in calculating fees (which

is admittedly easier than calculating fees for e.g.

private sector R&D intensive innovation).

•

The requirement for non-discrimination

is further specied in order to ensure free

exchange of information between public sector

bodies when exercising public tasks, “whilst

other parties are charged for the re-use of the

same documents”, including differentiated

charging policy for commercial and non-

commercial re-use.79

•

The Directive requires that applicable conditions

and the actual amount of those charges should

be transparent (i.e. pre-established and public),

including (on request) the calculation basis

for charges and what factors should be taken

into account in the calculation of charges for

atypical cases.80 This approach mirrors to

some degree the behavioural aspect to FRAND

licensing for SEPs set out in Huawei v ZTE and the

European Commission’s call for transparency

and predictability in SEP licensing.81

•

Highlighting the importance of broad access, the

Directive notes that where public sector bodies

allow for re-use of documents, conditions should

not unnecessarily restrict possibilities for re-

use. In particular, conditions should not be

used to restrict competition,82 and must be non-

discriminatory for comparable categories of re-

use (rather than users), notably where re-use

also occurs by the commercial activities of public

sector bodies.

83

Re-use is open to all potential

actors and the Directive expressly prohibits the

application of exclusive rights (except for the

78 Ibid.

79 See Recital 19 of the PSI Directive.

80 See Article 7 of the PSI Directive.

81 See Section V. a) above.

82 See Article 8(1) of the PSI Directive.

83 See Article 10 of the PSI Directive.

digitisation of cultural resources).84

V. Regulation Horizon 2020

50

The European Union’s Framework Programme for

Research and Innovation (Horizon 2020) is governed

by Regulation 1290/2013,85 that lays down the rules

for participation and dissemination in Horizon 2020

over the years 2014-2020. In general, it can be said

that the EU’s “Horizon 2020” Framework Programme

applies a FRAND-based model to enable access to the

results of EU-funded projects, with the overarching

principle for access being one of fairness and

reasonableness. Article 48 of that Regulation covers

access rights for exploitation and notes that, whether

linked to access between project participants of the

results or background information, or other, such

access shall be granted under fair and reasonable

conditions (subject to agreement).

51

The Commission’s own Model Grant Agreements

for the EU’s “Horizon 2020” Framework Programme

applies the model set out in the Regulation

and, together with the Regulation provides an

understanding of the EU’s interpretation of FRAND

access as a condition for accessing the results of

European funded research.86 It covers the rights of

participants to the agreement (“beneciaries” of

funding) to have access under fair and reasonable

conditions to each other’s results (relevant

background input held by participants prior to

their accession to the project) that are needed for

exploiting their own results.

87

Such access conditions

apply where beneciaries give each other access to

the results needed for implementing their own tasks

(or to other beneciaries or afliated entities).88 In

addition, there are options to require (when foreseen

in the work programme) access to third parties for

additional access rights for interoperability under

fair and reasonable or royalty free conditions.89

84 See Article 11 of the PSI Directive.

85 Regulation (EU) No 1290/2013 of the European Parliament

and of the Council of 11 December 2013 laying down the

rules for participation and dissemination in Horizon 2020

- the Framework Programme for Research and Innovation

(2014-2020) and repealing Regulation (EC) No 1906/2006. OJ

L347/81, 20.12.2013.

86 See the H2020 Programme Multi-Beneciary Model Grant

Agreement of October 2017 at

research/participants/data/ref/h2020/mga/sme/h2020-

mga-sme-2-multi_en.pdf>.

87 Ibid, Article 25 (access is restricted if the beneciary

holding the background has notied others prior to signing

the Agreement that access to its background is subject to

legal restrictions or limits).

88 Ibid, Article 31.

89 Ibid, Article 31.6.

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52

Article 2(1)(10) of the Regulation denes “fair

and reasonable conditions” to mean “appropriate

conditions, including possible nancial terms or

royalty- free conditions, taking into account the

specic circumstances of the request for access, for

example the actual or potential value of the results

or background to which access is requested and/or

the scope, duration or other characteristics of the

exploitation envisaged”.90 This denition applies to

all the access situations described above.91

53

It is notable that, no matter whether the access

requirements relate to members of the consortium

or their afliates, whether for fullling their tasks,

for exploiting their own efforts, or as relates to

third parties (in relation to interoperability), the

access regime remains the same. One can assume

that “fair and reasonable” was considered by the

legislature as exible enough to deal with this broad

range of interests and situations. For this reason,

the denition implies that conditions can change

depending on the circumstances of the request

for access (i.e. the nature of the parties), as well

as depending on the subjective nature of value or

“other characteristics”. Again, while not using the

expression “FRAND”, it can be assumed that the non-

discriminatory aspect is included, as the denition

specically allows for differentiation where such a

differentiation can be made.

VI. Vehicle Emissions Regulation

54

European Regulation (EU) 715/2007, relating to

emissions from light passenger and commercial

vehicles and access to vehicle repair and

maintenance information, contains a FRAND-

based information sharing regime. It imposes

specic obligations on vehicle manufacturers to

enable access to vehicle repair and maintenance

information both to authorised and independent

dealers and repairers.92 Such access is on a non-

discriminatory basis while permitting manufacturers

to charge a “reasonable and proportionate fee”.

93

However, the Regulation also notes that such fee is

not reasonable or proportionate “if it discourages

access by failing to take into account the extent to

which the independent operator uses it”, making it

90 Regulation 1290/2013, Article 2(1)(10).

91 Ibid, Article 25(3). Note that under Article 31, a distinction

is drawn between royalty-bearing and royalty free, as these

two options are given. However, logic would dictate that

“fair and reasonable” includes royalty free in the range

of royalties (as expressly noted in the denition of Article

25(3)) and because there are usually other material terms

and conditions in licensing agreements that should also be

fair, reasonable and non-discriminatory.

92 Vehicle Emission’s Regulation, Article 7(1).

93 Ibid.

clear that the fee also needs to be in proportion to

the importance of the information to the user as well

as a reasonable value to the manufacturer.94

55

Although not using the exact “FRAND” wording, the

Vehicle Emissions Regulation very much mirrors the

FRAND intention of ensuring that fees are reasonable

and non-discriminatory, while at the same time not

discouraging access.

VII. Directive on Payment Services

56

The revised Directive on Payment Services in the

Internal Market95 of 25 November 2015 sets out

that account servicing payment service providers,

such as banks, must allow third parties to obtain

real-time data relating to customers’ accounts

on a non-discriminatory basis (including without

any discrimination in terms of charges, timing

and priority).96 Colangelo and Borgogno query

whether banks can charge a fee for the access to

front-end third-party providers and speculate that

such compulsory access can be compensated, “as it

happens, mutatis mutandis, with standard essential

patents that are licensed under fair, reasonable and

non-discriminatory (“FRAND”) terms”.97 We agree

that such access would be on the basis of FRAND

principles, in accordance with the recognised

commercial practices in the payment services eld

(rather than SEPs, per se). One can presume that

where European regulation requires access to data

and interoperability, such access must be on FRAND

terms.

94 Regulation (EC) 715/2007 of the European Parliament and of

the Council on type approval of motor vehicles with respect

to emissions from light passenger and commercial vehicles

(Euro 5 and Euro 6) and on access to vehicle repair and

maintenance information [2007] OJ L 171/1. See also Benoit

Van Asbroeck Julien Debussche Jasmien César, Building

the European Data Economy & Data Ownership, 1 January

2017. Available at <https://www.twobirds.com/en/news/

articles/2017/global/data-ownership-in-the-context-of-

the-european-data-economy>.

95 Directive (EU) 2015/2366 of the European Parliament and

of the Council of 25 November 2015 on payment services

in the internal market, amending Directives 2002/65/

EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No

1093/2010, and repealing Directive 2007/64/EC (Text with

EEA relevance)

96 Ibid, Articles 64-68.

97 Colangelo and Borgogno, Data, Innovation and Transatlantic

Competition in Finance: The Case of the Access to Account Rule,

Stanford-Vienna European Union Law Working Paper No.

35, 2018, . Page 16

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VIII. Credit Rating Agency

Regulation

57 The European Regulation 462/2013 of 21 May 201398

amending Regulation No 1060/2009 on credit rating

agencies included a FRAND-like requirement. As

noted in recital 38, fees charged by credit rating

agencies to their clients should not be discriminatory,

although charging for the same type of service to

different clients can be justied by a difference

in the actual costs in providing this service. New

Article 3(c) goes further in setting costs parameters

by requiring credit rating agencies to ensure that

fees are based on the actual costs of providing the

service and cannot be affected by either the level of

the credit rating issued nor on any other result or

outcome of the work performed. It would be logical to

assume that costs for developing better software etc.

would be included in the “actual” cost of assessing

a customer’s credit rating. Otherwise the incentive

to improve credit rating services would be affected.

In addition, recital 33 imposes a transparency and

oversight requirement, requiring credit rating

agencies to disclose to the European Securities and

Markets Authority their general policies and fees

received from each of their clients, in order to allow

for the effective supervision of the rules.

IX. EU Benchmarks Regulation

58

The pricing of many nancial instruments and

contracts rely on the accuracy of benchmarks.

However, following the serious manipulation of

LIBOR, EURIBOR and other benchmarks by various

cartels99 and the impact that the failure of critical

benchmarks can have on market integrity, nancial

stability, consumers, the real economy, or the

nancing of households and businesses, the EU

adopted the Benchmarks Regulation.100 Specically

to mitigate the market power of critical benchmark

administrators and bring discipline to the market,

the Regulation contains a FRAND regime imposing,

under Article 22, the obligation on administrators of

98 Regulation (EU) No 462/2013 of the European Parliament

and of the Council of 21 May 2013 amending Regulation

(EC) No 1060/2009 on credit rating agencies Text with EEA

relevance. OJ L 146, 31.5.2013, p. 1–33.

99 See e.g. Boot, Nuria and Klein, Timo and Schinkel,

Maarten Pieter, Collusive Benchmark Rates Fixing (May 1,

2018). Tinbergen Institute Discussion Paper 2017-122/VII.

Available at SSRN: .

100 Regulation (EU) 2016/1011 of the European Parliament and

of the Council of 8 June 2016 on indices used as benchmarks

in nancial instruments and nancial contracts or to

measure the performance of investment funds and

amending Directives 2008/48/EC and 2014/17/EU and

Regulation (EU) No 596/2014 (Text with EEA relevance). OJ

L 171, 29.6.2016, p. 1–65. See Recital 35.

critical benchmarks, including critical commodity

benchmarks,101 to take “adequate steps to ensure

that licences of, and information relating to, the

benchmark are provided to all users on a fair,

reasonable, transparent and non-discriminatory

basis”.102 This requirement is without prejudice to

the application of EU competition law.

X. European Commission

Policy Discussions for

FRAND Access to Data

59

The Commission is already considering the possibility

of sharing the access to data between businesses, with

FRAND access being one of the considered models.

In 2017 the Commission published a Communication

entitled “Building a European Data Economy”. In

relation to access to data, the Commission explored

the idea of applying a FRAND regime, whereby

access to machine generated data would be granted

against remuneration.103 The Communication notes

that: “A framework potentially based on certain

key principles, such as fair, reasonable and non -

discriminatory (FRAND) terms, could be developed

for data holders, such as manufacturers, service

providers or other parties, to provide access to

the data they hold against remuneration after

anonymisation. Relevant legitimate interests, as

well as the need to protect trade secrets, would

need to be taken into account. The consideration of

different access regimes for different sectors and/or

business models could also be envisaged in order to

take into account the specicities of each industry.

For instance, in some cases, open access to data (full

or partial) could be the preferred choice both for

rms and for society.”104

101 Ibid, Recital 38

102 See also, for example, the UK Financial Conduct Authority

policy statement also requiring regulated benchmark

administrators to grant access to and licenses to use

benchmarks on a FRAND basis See PS16/4, February 2016.

For example, para 1.9 states “In summary, our proposals

required regulated benchmark administrators to grant

access to and licences to use benchmarks on a fair,

reasonable and non-discriminatory basis, including with

regards to price. We proposed that such access should be

provided within three months following a written request.

We proposed that different fees should be charged to

different users only where this is objectively justied,

having regard to reasonable commercial grounds such as

the quantity, scope or eld of use requested. Our proposals

also set out a list of non-exhaustive factors that we may

consider in assessing whether the terms of access to a

benchmark are FRAND”.

103 European Commission, Towards a common European data

space (Communication), COM(2018) 232 nal.

104 Ibid, page 13.

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60

The Communication highlights that a FRAND regime

is business model neutral, recognising that data

will have a value to the owner, while permitting

both remuneration-based, as well as free access,

and is exible enough to take different sectorial

interests and regulatory parameters (in this case

anonymisation) into account. The Staff Working

Document (SWD) accompanying the Communication

acknowledges that inspiration can be found across

a range of instruments, including some of those

explored in the sections above.105

61

Following a public consultation, the Commission

in 2018 published a Guidance on Sharing Private

Sector Data in the European Data Economy.106 It

recommended companies to consider voluntarily

granting access to non-personal data to other

businesses and, when doing so, to adhere to

certain principles related to transparency, respect

to each other’s commercial interests, to ensure

undistorted competition, and minimise lock-in.

107

The Commission at least appears to recognise that

the problems raised by big data and dominant digital

platforms could be resolved by some form of data

sharing requirement on principles that mirror

notions protected by the FRAND regime.

F. The Nature of FRAND

under European Law

62

We see FRAND-based access regimes applied

by European legislation across multiple sectors

and activities, fostering the sharing essential

technologies or access to critical inputs in both

regulated and unregulated sectors. These FRAND

access regimes are imposed to promote various

public interests relating to both private and public

sector bodies. The nature of the entities that control

105 European Commission Staff Working on the free ow of

data and emerging issues of the European data economy.

Accompanying the document. Communication Building

a European data economy, 10.1.2017 SWD(2017) 2 nal.

A number of academics such as Drexl (footnote 56) or

Daniel L. Rubinfeld & Michal Gal (see Access Barriers to Big

Data (August 26, 2016). 59 Arizona Law Review 339 (2017).

Available at SSRN: <https://ssrn.com/abstract=2830586>

or <http://dx.doi.org/10.2139/ssrn.2830586>) also seized

upon FRAND as a model to replicate in the data context. Van

Asbroeck, Debussche & César (footnote 95) argue at p 85,

that “Providing more favourable access conditions in case

of sole-source databases could be a particularly interesting

course of further analysis. It could also be examined

whether some of the outstanding access to data issues could

be solved by using open licences allowing for commercial

re-exploitation and re-utilisation of the information on fair

and non-discriminatory terms.”

106 European Commission, Guidance on Sharing Private Sector

Data in the European Economy (Communication), SWD(2018)

125 nal.

107 Ibid, p.3.

the critical input is also varied. In some instances, the

entities may possess or are likely to possess market

power, in other instances the input is critical for

market activity yet not necessarily critical to market

access. In some instances, FRAND is applied in the

context of disputes with particular steps in order to

ensure access on reasonable terms. This shows the

exibility of the FRAND regime, which can apply to

different players and in different circumstances.

63

The core elements of a FRAND regime can be

summarised. At a high level, the purpose of

the FRAND regime is to ensure broad and non-

discriminatory access to the relevant input. Where

legal relations need to be regulated, such access will

often be though a license or similar agreement, but

where access is guaranteed, a separate agreement

may not be required. Its aim is to ensure the widest

possible market access and use of the input, while

avoiding lock-in, hold up, or foreclosure.

64

From the regulatory FRAND examples highlighted

above, the Standardisation Regulation and EECC

expressly refer to the term “fair, reasonable and

non-discriminatory” while leaving the details of

the arrangement to the market. The other examples

use access regimes that are essentially identical to

FRAND in all but the express wording, creating

FRAND-based conditions of balance, reasonableness,

non-discrimination and transparency. In fact, it

is arguable that the FRAND regime used by the

European institutions is a general principle and that

a FRAND policy need not reect those exact words, in

that exact order, in order to achieve the same result.

It would be difcult to argue that those laws that

do not use the exact expression “FRAND” somehow

grant access on a signicantly different basis.

65 The various examples of European regulation each

provide, to some degree, greater guidance on the

detail FRAND-like regimes, displaying signicant

consistency across the board. In particular:

•

Fair & Reasonable balance: Legislation

covering REACH, the European Vehicle

Emissions Regulation, the Public Sector

Information Directive and the Horizon 2020

Regulation, provide parameters and guide

points on calculating payment (“compensation”,

“income”, “charge”, “financial terms”),

emphasising the balance between costs/

investment over use/access and reecting the

different interests of the parties.

•

Transparency: In addition, the Re-use of

Public Sector Information Directive focuses on

transparency of terms and conditions, including

(on request) the calculation basis for the fee,

mirroring Huawei v ZTE requirements for FRAND

licensing of SEPs. In REACH and Huawei v ZTE,

A FRAND Regime for Dominant Digital Platforms

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53

1

both the holder of the critical input and the user

have an obligation to nd a fair and reasonable

result.

•

Non-Discrimination: In the Re-use of Public

Sector Information Directive, public sector

bodies will not discriminate if they grant

free access to another public body fullling a

public sector task, while commercial parties

can be charged for the re-use of the same

documents. The Horizon 2020 Regulation applies

a “fair and reasonable” denition that enables

differentiation where this can objectively be

made (and it can therefore be assumed that non-

discrimination is implicitly included).

•

Dispute Resolution: In order to achieve the

FRAND balance, there is an obligation on both

parties to act in good faith. That is expressly

set out in REACH, Huawei v ZTE framework

for SEPs, and implied in Horizon 2020, which

refers to fair and reasonable access being

granted “subject to agreement”. In the event

of intractable disagreement, various forms of

dispute resolution are available including the

involvement or regulatory agencies, arbitration

and mediation, but always preserving access to

courts in the nal instance.

66 Other notable points that underpin FRAND include:

fostering access (the EECC focuses on the broad

availability and variety of programming and services

or Horizon 2020 access to research results); promoting

key elements found in all FRAND frameworks

(efciency, competition, investment, innovation,

consumer welfare); and favouring bilateral, market-

based contractual negotiations over government

intervention, within the parameters set out in the

legislation.

67

Therefore, the review of FRAND access remedies

in EU legislation shows that the public interest

can underpin access regimes providing an ex ante

framework which competition and regulatory policy

can support, given the limitations of competition law

in ex post market correction.

While there are calls for

ex ante common carrier or public utility regulation,

108

it is clear that well-articulated public interest criteria

can be the basis of a FRAND regime, which will take

a balanced, proportionate and pragmatic approach

to the sharing of critical or important resources

without the need for treating at least dominant

platforms’ activities as essential facilities or public

utilities.109

108 Khan (2017), page 797 et seq. See footnote 5.

109 “There is also a case for considering new ex ante regulatory

tools to enhance the competitive process in digital platform

markets: standards and interoperability, data portability,

consumer transparency, and algorithmic pricing. In each

of these, the challenge is translating well-established

G. The relevance of a FRAND

access regime to dominant

digital platforms

68

Having discussed the usability of FRAND access

regimes in EU legislation and competition cases,

the next issue to be assessed is its relevance for

dominant digital platforms. A FRAND access regime

can be useful in resolving issues both in relation to

access to essential data and access to platforms. As

seen, the application of competition law to ensure

access to data considered essential for conducting

business held by dominant platforms, may not be

adequate to ensure full and timely access. Providing

access to critical data on FRAND terms could be a

way of fostering competition, but also protecting

the interests and incentives to innovate digital

platforms. Moreover, FRAND access can also be

relevant in cases when dominant digital platforms

refuse to provide access to its platform to rivals.

69

Calculating what precisely FRAND terms are may

not be straight forward, and assessing “fair and

reasonable” in the abstract remains complex.110

There are numerous economic theories proposed

for assessing the value for accessing technology,

some of which purport to be FRAND-specic.111

Not only do sectors and inputs differ (including,

importantly, the legal regime governing them) but

parties will have subjective notions of value, which

is inuenced by their different needs and incentives.

This was recognised in the Horizon 2020 Regulation’s

principles of competition analysis, law, and enforcement

practice into the new domain of digital platforms”. Coyle

(2018), p. 17. See footnote 8.

110 Concerns about FRAND are often coloured by the very

public disagreements over FRAND royalty rates for essential

patents. See for example Denis Carlton, Allan Shampine,

‘An Economic Interpretation of FRAND’ (2013) 9 Journal of

Competition Law & Economics 531(arguing for the use of ex ante

incremental value of the patent before it was included in a

standard); and Gregory Sidak, ‘The Meaning of FRAND, Part

I: Royalties’ (2013) 9 Journal of Competition Law & Economics

931 (criticising the use of ex ante incremental value approach

and suggesting the use of comparable licenses as a best

indicator of a patent’s market value). However, there are

key distinctions between the regulation of FRAND regimes

for digital platforms and the private ordering system

under FRAND-based standardisation. First, the key input

in standardisation (the technological specications making

up the standard and the patents that protect these essential

technologies) are publicly available, so that it is therefore

possible, and indeed usual practice, for the technology to

be implemented before licensing terms are agreed. This can

lead to gaming of the system with the SEP holder playing

“catch up”. However, in the context of regulated access,

agreement on terms should occur before access is granted.

111 See Norman Neyrinck, The Value of Intangibles – Remedies for

Abuse of Refusal to License, Working Paper. P. 45. Available

at <http://www.emulation-innovation.be/wp-content/

uploads/2013/09/Remedies-for-Abuse-of-Refusal-to-

License-Norman-Neyrinck-22-11-2010.pdf>.

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Mathew Heim and Igor Nikolic

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denition of “fair and reasonable conditions”,

accepting that conditions could change depending

on the position of the parties; i.e. the circumstances

of the access request, the nature of value of the

input, or other characteristics. Having said that,

metrics do have an important role to play in terms

of transparency purposes, when the parties are not

able to reach a compromise or where terms need to

be determined by a third party. Such a third party,

whether a regulator, court, arbitrator or mediator,

will need to be informed by valuation principles and

modelling.112

70

Assessing FRAND terms begins with an understanding

of the nature of the input and relevant ecosystem.

Some of the FRAND-based regulations are

distinguished by the multiplicity of players involved

in granting access to essential input that they control.

One such example is REACH where we see common

base formulae across product markets, applying

per-tonnage xed-fee price bands per substance.113

Clearly each sector will have different considerations

attached to them. FRAND metrics discussed for

access to e.g. public data, publicly funded project

results, standard essential technologies or access to

API, are not interchangeable.

71

However, this paper shows that there are general

principles that narrow down the discussion and

concentrate the mind. Value considerations for

access to dominant digital platform inputs are not

impossible to explore. Looking at FRAND licensing

commitments made by dominant platforms in

merger cases, provides a useful insight into different

means to assess FRAND.

72

For example, in Worldline/Equens, the remedies

actually set out that the pricing of Poseidon

licensing terms, which are structured around three

main aspects, i.e. reference modules for which a

price list is provided to NSPs to serve as a basis for

bilateral negotiations; software maintenance fees,

reference to a percentage of the license fee paid

by NSPs (adjusted annually); and fees for ad hoc

support services, set by reference to an hourly rate

(adjusted annually). We therefore see that FRAND

principles focus on providing transparent pricing,

which can be the focus of negotiations and, where

needed, adjudicated. The role of the Licensing

112 What is clear is who chooses the metrics to use in order to

determine the access terms, is as important as the metrics

themselves. This narrows choices down in determining the

terms themselves (usually the parties). But the oversight

mechanism - who monitors the agreements and who

adjudicates disputes (and their powers) - is equally critical

in ensuring parties do not game the system.

113 See for example the European Chemical Industry Council

(CEFIC) guidance for its Substance Information Exchange

Forum at <https://cec.org/app/uploads/2019/01/Fair-

and-transparent-cost-sharing-in-SIEFs_REACHImpl_Legal.

pdf>.

Trustee is therefore a signicant element, as is their

need to have access to all of Worldline licenses in

order to adjudicate on disputes. Nor does FRAND

necessarily relate to the “price” of one input, but

rather to all elements that are needed to ensure

effective access, including maintenance, additional

modules and upgrades. For this reason, the Worldline/

Equens remedies also included various anking

commitments.114

73

In Newscorp/Telepiù, FRAND pricing for access to

the API is to be determined by the lowest of the

prices obtained when applying the two following

principles: “(i) cost-oriented basis adopting where

appropriate a long-run incremental costs approach

and including a fair and reasonable contribution

to the investment costs of set-top box roll-out and

related infrastructure plus a reasonable return

and (ii) relevant market values (where they exist)

for comparable services.”115 It is notable that the

Commission was willing to rely on two calculation

methods: one economic model that factors both

investment costs for implementation and return to

the API holder; and one focusing on existing market

comparables. However, rather than averaging out

the rate, the policy choice was made to accept the

lowest of the two.

74

One of the metrics that tends to have uniform

acceptance and is reected in both the Worldline/

Equens and Newscorp/Telepiù remedies, is the use

of comparable agreements or a track record of

agreements. In the context of dominant digital

platforms providing FRAND access, a question

arises where there are no agreements that can act

as precedent. The various FRAND metrics that can

be considered cannot be divorced from the central

question: “what can both parties live with?”116

75

Finally, it is also clear that FRAND cannot

merely mean “cheap”; such an approach would

disincentivise investment in developing innovative

technology solutions and, perversely, condemn the

most successful technologies to be less valuable.

The FRAND regime reects the balance between

the importance of ensuring easy access to an input,

while ensuring that the holder of the input is fairly

remunerated. This means agreeing to a value that

does not inhibit access but that also recognises,

in addition to the value of technology, R&D costs,

114 See footnote 26.

115 See footnote 24. Part II, para 11.6.

116 But it is also true that, depending on the circumstances and

nature of the parties, the nancial terms may be only one

consideration. A FRAND regime includes within its notion

of fairness and reasonableness royalty-free and other non-

monetary considerations provided by the user for access,

as well as important terms and conditions, which must be

both fair, reasonable and non-discriminatory for access to

the input.

A FRAND Regime for Dominant Digital Platforms

2019

55

1

risks taken, cost of capital etc. in order to incentivise

future R&D projects.117 Therefore the choice of the

appropriate pricing methodology becomes a policy

choice, as where to strike the right balance between

fostering upstream or downstream innovation.118

H. Conclusion: A FRAND policy for

Dominant Digital Platforms?

76

This paper has shown that there are numerous

examples of the FRAND regime being used in

European law, regulation and policy to ensure that

critical inputs become or remain accessible to third

parties. In fact, European regulation relating to access

to critical inputs often appears to coalesce around

FRAND access principles. A FRAND access regime

would therefore have many benets in addressing

issues raised in markets where companies may play

a gatekeeper function, such as digital platforms.

Indeed, the FRAND regime has already guaranteed

interoperability with broader ecosystems and third-

party applications, as well as fair access to critical

online platforms. At the same time, it allows fair

compensation for the sharing of technology, thereby

encouraging further investment in future innovation

and competition in other markets. It can also be

used to maintain APIs for third party access and can

ensure access to data which is of great importance

to a competitive and dynamic digitalisation of the

European economy.

77

When elaborating policies related to digital platforms

and/or data, the European Commission could seek

inspiration from these sources. The FRAND regime

is inherently exible and indeed business -model

neutral as it creates a level playing eld between

players on recognised commercial terms. Although

the form that an access remedy should take depends

on the nature of the input - both its physical nature

(in this case non-tangible) and its legal nature -

the FRAND regime side-steps many regulatory

difculties by creating an overarching model.119

While public policy may set out various parameters

for the sector input in question, terms and conditions

of access, in their broadest sense, are left to bilateral

market-based negotiations between participants

in their particular market context with a dispute

resolution or judicial backstop. In other words,

FRAND enables the maintenance of competitive

conditions, according to existing industry norms and

117 See e.g. European Commission, Setting out the EU approach to

Standard Essential Patent (Communication), COM(2017) 712

nal, 29 November 2017.

118 See Neyrinck (2010), footnote 112.

119 See Jacopo Ciani, Governing Data Trade in Intelligent

Environments: A Taxonomy of Possible Regulatory Regimes

Between Property and Access Rights, Intelligent Environments

2018 285 in I. Chatzigiannakis et al. (Eds.).

practices, minimising disruptions and ensuring that

regulatory solutions are as seamless and as limited

as possible.

78

The implementation of a FRAND access regime

may be voluntarily adopted ex ante by emerging

digital platforms, before network effects become

entrenched. Having in place access regimes to enable

new entrants to compete on or for the market would

be a preventative measure forestalling competition

scrutiny. Competition law guidance would be

benecial in providing some legal certainty on

the scope of such a remedy in competition law, for

example creating a safe harbour where platforms

undertake to provide access of FRAND terms and

based on the European Commission’s practice. This

can be supplemented by ad hoc competition law

enforcement to ensure access where competitive

harm might otherwise occur. Moreover, while

competition enforcement may not be able to resolve

all of the issues raised by dominant digital platforms,

competition policy can play an important supporting

function in enforcement, policy and advocacy.

79

Alternatively, such access can be mandated by future

legislation. Subjecting the platform to FRAND access

provisions prevents the need to engage in regulated

access ex post, as FRAND terms are market based. From

an industrial policy perspective, however, the public

interest tests elaborated in existing FRAND-based

legislation are instructive in moving undertakings

to adopt FRAND-based access. Therefore, while

regulators deliberate dominant digital platforms,

FRAND regimes can be considered as an effective

access framework beyond the classic notions of

market power.

80 This brief review of European regulation and policy

should provide comfort and inspiration that a

FRAND-based approach can ensure fair access to

relevant platforms and services, in order to enable

effective competition and full European public

interests. Regulation and competition policy will

need to work hand in hand in identifying coherent

regulatory approaches. Competition policy can

assist European policy makers to engage in a

more coherent manner by providing guidance for

dominant digital platforms to adopt voluntary

FRAND commitments and be consistent in the use

of FRAND-based remedies, where appropriate.