Heim, M., Nikolic, I.* “A FRAND Regime for Dominant Digital Platforms”
The paper “A FRAND Regime for Dominant Digital Platforms” (Heim, M., Nikolic, I.*) will be presented at the 8th Conference on the Regulation of Infrastructures (20-21 June, 2019).
Dominant digital platforms are under increased scrutiny by regulators around the world, notably competition authorities. Much of the discussion focuses on market access and contestability. However, many doubt whether traditional competition law enforcement can, by itself, be an adequate solution to the challenges posed by dominant digital 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 innovate. The paper shows that, beyond the application of FRAND in the competition law context, the European Union institutions have consistently used the FRAND regime to ensure access to critical infrastructure 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 benchmark 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 regulatory solution for dominant digital platforms.
There are a number of policy options available which, rather than being alternatives, could be complementary. First, implementation of a FRAND access regime could 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 beneficial in providing some legal certainty on the scope of such a remedy, for example by creating a safe harbour. Guidance should be based on the European Commission’s practice, which is sufficiently extensive. Second, this approach can be supplemented by ad hoc competition law enforcement to ensure access where competitive harm might otherwise occur.
Competition law may not be able to resolve all of the issues raised by dominant digital platforms. Therefore a third option would be for FRAND access to be mandated by future European legislation, based on for public policy criteria. Subjecting the platform to FRAND access provisions prevents the need to engage in regulated access ex post, as FRAND terms are market based. The public interest policies elaborated in existing FRAND-based legislation (such as media plurality, access to information, access to communication networks and infrastructure, access to EU-funded research) are instructive in moving undertakings to adopt FRAND-based access. Therefore, while regulators deliberate on the question of dominant digital platforms, legislated FRAND regimes can be considered as an effective access framework beyond the classic notions of market power. There is sufficient precedence in existing European legislation to serve as guidance.
As a result, FRAND enables the maintenance of competitive conditions, according to existing industry norms and practices, minimising disruptions and ensuring that regulatory solutions are as seamless and as limited as possible.
Presentation is available here.
ABOUT THE AUTHORS
Mathew Heim is an independent adviser assisting companies and governments to understand and manage complex European legal, regulatory or political matters, with particular focus on high tech and digital markets, innovation and competition. Most recently Mathew was Vice President and Counsel for Government Affairs at Qualcomm Inc., where he focused on the interplay between intellectual property rights, industrial policy regulation and competition law. He was also involved in advising the company on significant international regulatory and legal challenges outside of Europe, including the political, policy and communications aspects of mergers and acquisitions, antitrust investigations and IP litigation. Prior to that, Mathew represented commercial interests during some of the most high-profile European anti-trust and merger cases.
Amongst other functions, Mathew is also Special Adviser to 4iP Council Europe; Visiting Research Fellow at Bruegel; Non-Governmental Advisor to the International Competition Network; Vice Chair of BIAC’s Competition Committee to OECD; Editorial Board Member of the IBA’s Competition Law International; Advisory Board Member of the Fordham Competition Law Institute; Advisory Board Member of the Competition Law Forum at the British Institute of International and Comparative Law. He is also Associate Tenant at Tanfield Chambers, a Barristers’ Chambers in London. Mathew read History at Bristol University and Politics at Exeter University before being called to the Bar at the Honourable Society of Lincoln’s Inn.
Dr. Igor Nikolic is Assistant Professor at Tilburg University, the Netherlands. His area of expertise lies in competition law, intellectual property law and the regulation of technology. In particular, he researches and writes about the licensing issues related to the use of standard essential patents in technology standards. He obtained PhD in Law from University College London and LLM from University of Groningen.
* presenting author