ICLE Comments to the CMA on Technology-Transfer Agreements
I. Introduction and Summary
The International Center for Law & Economics (ICLE) respectfully submits these comments in response to the Competition and Markets Authority’s (CMA) consultation on its draft guidance concerning the application of the Chapter I prohibition in the Competition Act 1998 to technology-transfer agreements.[1] ICLE is a nonprofit, nonpartisan research centre dedicated to the scholarly study of law and economics. Our scholars have written extensively on intellectual property and competition policy, including the licensing of standard-essential patents (SEPs).
These comments address a single question raised in the consultation: the CMA’s proposal not to provide specific guidance on licensing negotiation groups (LNGs).[2] The CMA has elected to assess LNG arrangements on a case-by-case basis, taking account of the specific factual and economic circumstances of each arrangement,[3] rather than establishing a categorical safe harbour of the kind the European Commission initially proposed in its draft revised Technology Transfer Guidelines.[4] That is the correct approach for three related reasons.
First, LNGs are not the mirror image of patent pools, and the analogy underlying the draft EU safe harbour does not withstand economic scrutiny. Second, a categorical safe harbour is poorly suited to a form of conduct that remains novel, untested in practice, and capable of operating either benignly or as a vehicle for collective holdout and buyer-side coordination. These are precisely the circumstances in which the error-cost framework favours case-specific assessment over a blanket exemption. Third, the EU experience is instructive. Even after the Commission retreated from a formal safe harbour, its decision to retain a bespoke analytical framework for LNGs has not resolved the underlying concerns. The CMA is therefore right to decline to follow suit at this stage.
These comments build on positions ICLE has advanced in related consultations and proceedings.[5] They conclude that the CMA’s restraint reflects sound institutional and economic judgment and that the final guidance should preserve that approach.
II. A Safe Harbour for LNGs Would Be Premature
The CMA has explained that it does not consider it appropriate to include specific guidance on LNGs in the draft guidance. It notes that LNGs have emerged only recently in technology-transfer licensing, that the CMA has no institutional experience assessing LNG arrangements, and that, to the best of its knowledge, no LNGs currently operate in the United Kingdom.[6] In light of those considerations, the CMA concluded that LNGs should be assessed on a case-by-case basis, while reserving the possibility of revisiting the issue as market practice, enforcement activity, or institutional experience evolves.
This is a measured and defensible position. Competition guidance should provide businesses with a reasonable degree of predictability about how an authority will exercise its enforcement discretion in recurring and well-understood circumstances. A safe harbour, in particular, signals that a defined category of conduct is sufficiently unlikely to harm competition that it generally does not warrant scrutiny. Extending such a signal to a category of arrangement that remains novel, largely untested in practice, and economically ambiguous would be premature. It would commit the CMA to a posture of forbearance before acquiring the experience necessary to determine whether such forbearance is justified.
Nor is any special rule required. LNGs can be assessed under the existing analytical framework that the draft guidance already sets out for agreements that may restrict competition by effect. That framework examines the nature and content of the agreement, the market position of the parties, competitors and buyers, barriers to entry, and the broader competitive dynamics of the market. Nothing about LNGs requires the CMA to displace that framework with a categorical rule.
The case-by-case approach is therefore not a gap in the guidance. It reflects the considered application of established competition-law principles to a form of conduct that does not yet warrant special treatment.
III. LNGs Are Not the Buyer-Side Equivalent of Patent Pools
The principal justification for an LNG safe harbour is that LNGs are the buyer-side analogue of patent pools, which competition authorities generally regard as procompetitive.[7] That analogy underpinned the draft EU safe harbour,[8] and it is mistaken. Once that premise falls away, the case for a categorical exemption largely falls with it.
Patent pools involve the collective licensing of complementary patents—separately owned technologies that must be combined to implement a standard. By aggregating those rights into a single package, a pool can reduce transaction costs and mitigate royalty stacking, whereby multiple overlapping royalty demands inflate the total cost of implementing a standard. Because the pool integrates complements, it can reduce aggregate royalties while increasing the joint returns earned by contributing innovators, benefiting downstream implementers and, ultimately, consumers.[9]
LNGs operate on the opposite side of the transaction and according to a different economic logic. Rather than coordinating the sale of complementary technologies, an LNG coordinates the purchase of licences among implementers that would otherwise negotiate independently. In substance, LNG members are buyers acting collectively to determine the price they are willing to pay for technology licences. That structure more closely resembles a buyers’ cartel than a patent pool.
Treating the two arrangements as equivalent collapses the fundamental distinction between coordinating complements and coordinating substitutes. It also extends the efficiency rationale that justifies patent pools to conduct that does not share the same economic characteristics.[10]
The distinction is not merely formal. Buyers’ cartels can be just as harmful as sellers’ cartels. Just as sellers acting collectively can raise prices above competitive levels, buyers acting collectively can suppress prices below them. In the SEP context, royalties driven below competitive levels reduce returns to innovation and weaken incentives to invest in the technologies on which future standards will depend.
Competition authorities have long recognised this principle. In the music-licensing context, for example, the U.S. Department of Justice (DOJ) filed a statement of interest arguing that collective rate-negotiation strategies could constitute per se unlawful buyers’ cartels.[11] More recently, a senior DOJ official described the European Commission’s support for an automotive LNG as ‘unfortunate’ and difficult to reconcile with sound competition-law principles, warning that comparable arrangements would likely be treated as per se unlawful buyers’ cartels under U.S. law.[12]
Nor do the constraints that make patent pools generally benign have any clear analogue on the buyer side. A pool’s ability to charge supra-competitive rates is constrained by the continued availability of bilateral licensing. Because pool licences and bilateral licences are functional substitutes, a pool cannot sustainably charge more than the aggregate cost of available bilateral alternatives, net of the efficiencies the pool creates.[13] Pools are also typically limited to essential, complementary patents and are subject to FRAND commitments and non-discrimination obligations.
LNGs face no comparable built-in constraints. They are not limited to complements, they owe no non-discrimination obligations to patent holders, and their purpose is to consolidate bargaining power against sellers. Consolidating buyer-side bargaining power is not, by itself, a cognisable procompetitive efficiency. It is an exercise of collective monopsony power.[14]
IV. LNGs Do Not Warrant a Categorical Safe Harbour
Because the economic character of an LNG depends heavily on how it is structured and operated, the choice between case-by-case assessment and a categorical safe harbour matters. In one configuration, an LNG may reduce transaction costs and improve the quality of negotiations. In another, it may suppress royalties, facilitate collective holdout, or obscure whether individual implementers are genuinely willing licensees under the good-faith framework governing SEP disputes.
A safe harbour necessarily treats heterogeneous conduct as homogeneous. It draws a bright line and exempts everything that falls below it. That approach may be appropriate where the conduct is well understood, grounded in a demonstrated market failure, and reliably benign. It is ill-suited to novel conduct whose competitive effects turn on fact-specific features that a categorical rule cannot capture.
For LNGs, the better course is the one the CMA has chosen: case-by-case assessment under the existing effects-based framework.
A. No Market Failure Justifies an LNG Safe Harbour
The premise underlying calls for an LNG safe harbour is that implementers face a systemic ‘patent holdup’ problem that collective negotiation would correct. The empirical record does not support that premise. Studies have found no indication that SEP holders systematically extract supra-competitive royalties or undermine technology adoption.[15] A comprehensive 2023 study commissioned by the European Commission likewise found no discernible evidence that FRAND-licensing frictions have caused patent holders to contribute less to standards or induced implementers to avoid standardised technologies.[16] Standard-reliant industries have flourished under the prevailing licensing system.
As noted above, granting an antitrust exemption to LNGs would not be a neutral choice. Collective buying arrangements raise familiar competition-law concerns associated with horizontal cooperation among competitors. For policymakers, weighing the possible benefits and risks of LNGs therefore presupposes a market failure in need of correction. Absent evidence of a systemic holdup problem, favourable treatment for LNGs would risk introducing new distortions into SEP licensing, rather than correcting existing ones.[17]
The opposite concern—‘patent holdout’, in which implementers strategically delay or avoid taking licences to devalue SEPs and shift leverage against innovators—is, by contrast, well documented.[18] Empowering implementers to coordinate their negotiating posture could exacerbate that risk. Even commentators sympathetic to LNGs have acknowledged that, where members retain the ability to pursue bilateral deals after joint talks, a group may use the joint negotiation to gather information and then prolong individual negotiations—compounding the risks of delay and collective holdout.[19]
A categorical safe harbour would have to assume away these risks at the threshold. Case-by-case assessment allows the CMA to weigh them on the facts.
B. LNGs Complicate the FRAND Negotiation Framework
LNGs also raise unresolved questions about how collective negotiation interacts with the good-faith negotiation framework governing SEP disputes.[20] The European Court of Justice’s framework in Huawei v. ZTE establishes a structured bilateral process in which an implementer must demonstrate its willingness to take a FRAND licence.[21]
Collective negotiation complicates that framework. If implementers negotiate as a group, it becomes unclear what it means for any individual member to qualify as a ‘willing licensee’. It is likewise unclear whether a member could shelter behind the group’s collective negotiating position while later asserting its own willingness to take a licence.
The operating rules the European Commission examined in the automotive context illustrate the problem. Those rules permit members to reject the negotiated outcome and return to bilateral negotiations. The final EU Guidelines likewise do not require the outcome of LNG negotiations to bind participating members.[22] As a result, LNGs may create opportunities for strategic behaviour that are difficult to reconcile with the bilateral framework established in Huawei v. ZTE.
These are precisely the kinds of structural features whose competitive significance depends on the facts of a particular arrangement. They cannot be resolved in advance through a categorical exemption.
C. Error Costs Favour Case-by-Case Review
The error-cost framework that underpins modern competition analysis reinforces the CMA’s instinct. Where conduct is novel and its effects remain uncertain, the relevant question is which type of error is more costly and harder to reverse.
A categorical safe harbour invites false negatives. It would shield arrangements that, on closer inspection, suppress royalties or facilitate holdout. Once an ex ante exemption normalises such conduct, it becomes difficult to unwind.
Case-by-case assessment, by contrast, preserves the CMA’s ability to distinguish benign arrangements from harmful ones as it gains experience. It also does so without chilling procompetitive arrangements that parties can already defend under the existing effects-based framework.
False positives that burden genuinely procompetitive conduct are costly because efficient arrangements, once deterred, are not easily recreated.[23] But the answer to that concern is careful, fact-specific analysis—not a blunt categorical rule that errs in the opposite direction.[24]
V. The CMA’s Approach Is Preferable to the EU Framework
The CMA has rightly noted that it considered the European Commission’s revised approach and followed it where appropriate. On LNGs specifically, the comparison is instructive.
The Commission’s draft Guidelines proposed a safe harbour for LNGs subject to several safeguards, including open participation, disclosure of operating rules, a narrow scope limited to joint negotiation, restrictions on information exchange, a prohibition on coordinated conduct—including holdout—that would constrain either side’s freedom to negotiate bilaterally, freedom for technology holders to deal with third parties, and a cap limiting jointly negotiated fees to no more than 10 per cent of the price of products incorporating the licensed technology.[25]
Following extensive criticism, the Commission ultimately abandoned the proposed safe harbour. The final Guidelines nonetheless retain a dedicated section addressing LNGs, identifying their potential procompetitive and anticompetitive effects, distinguishing genuine LNGs from buyers’ cartels, and setting out factors relevant to determining whether an LNG is likely to restrict competition.[26]
That retreat from a formal exemption was an improvement. It did not, however, resolve the underlying concern. By according LNGs a bespoke analytical framework, the final EU Guidelines continue to normalise buyer-side coordination in SEP licensing and shift the debate from whether such coordination should be permitted to how it should be structured.[27] Nor do the safeguards identified by the Commission fully address the central concern. An LNG may aggregate implementers’ bargaining power while still allowing members to reject the negotiated outcome, prolong disputes, and exert downward pressure on royalties.[28]
Against that backdrop, the CMA’s decision not to provide a dedicated LNG section—let alone a safe harbour—is the more prudent course. It avoids both the false comfort of a categorical exemption and the subtler problem of a bespoke framework that legitimises the conduct it purports merely to analyse. The CMA’s acknowledgement that it lacks institutional experience with LNGs, that LNGs are a recent development, and that none currently operates in the United Kingdom is not a weakness in its reasoning. It is a principal reason why restraint is warranted.[29]
That restraint also promotes international coherence. U.S. authorities have signalled that LNG-type arrangements would likely be treated as unlawful buyers’ cartels,[30] while continuing to regard properly structured patent pools and SEP platforms as presumptively procompetitive.[31] By declining to enshrine special LNG treatment in its guidance and preserving the ability to assess each arrangement on its facts, the CMA remains aligned with the broad consensus that buyer-side coordination warrants scrutiny rather than categorical endorsement, while retaining flexibility to credit genuinely procompetitive arrangements where the evidence supports them.
VI. Conclusion
ICLE commends the CMA for declining to provide specific guidance on LNGs and for electing instead to assess such arrangements case by case. LNGs are not the mirror image of patent pools. They are a form of buyer-side coordination whose competitive effects depend on fact-specific features that a categorical safe harbour cannot capture.
The case for special LNG treatment remains unproven. The empirical evidence does not show a systemic holdup problem that would justify an antitrust exemption. By contrast, the risks of collective holdout, royalty suppression, strategic delay, and tension with the good-faith FRAND negotiation framework are real and difficult to police in advance. Those risks are especially acute where LNG members remain free to reject a jointly negotiated outcome and resume bilateral negotiations.
The EU’s experience confirms the point. The Commission first proposed a safe harbour, then retreated to a bespoke framework that still normalises the conduct. The safer course is the one the CMA has chosen: preserve the existing effects-based framework and assess the specific facts and economics of each arrangement.
ICLE therefore urges the CMA to retain its proposed approach in the final guidance. Should LNGs become more prevalent, or should enforcement experience accumulate, the CMA will be well placed to revisit the issue on the strength of evidence rather than on the basis of a contested analogy.[32] Until then, case-by-case assessment is fully adequate to the task.[33]
ICLE appreciates the opportunity to comment and would welcome the opportunity to discuss these issues further with the CMA.
[1] UK Competition & Markets Auth., Draft Guidance on the Application of the Chapter I Prohibition in the Competition Act 1998 to Technology Transfer Agreements (2026) [hereinafter CMA Draft Guidance]; UK Competition & Markets Auth., Consultation on Draft Guidance on the Application of the Chapter I Prohibition in the Competition Act 1998 to Technology Transfer Agreements (30 Apr. 2026) [hereinafter CMA Consultation].
[2] CMA Consultation, supra note 1, ¶ 5.3 (‘Do you have any comments on the CMA’s proposal not to provide specific guidance on LNGs?’).
[3] Id. ¶¶ 2.19–2.21; CMA Draft Guidance, supra note 1.
[4] Communication from the Commission—Approval of the Content of a Draft for a Commission Regulation on the Application of Article 101(3) of the Treaty on the Functioning of the European Union to Categories of Technology Transfer Agreements and a Draft for Commission Guidelines on the Application of Article 101 of the Treaty to Technology Transfer Agreements, 2025 O.J. (C/2025/5024) § 4.5 (16 Sept. 2025) [hereinafter Draft EU TT Guidelines].
[5] See, e.g., Int’l Ctr. for L. & Econ., Comments on the Draft Revised Technology Transfer Block Exemption Regulation and Technology Transfer Guidelines 4–7 (23 Oct. 2025) [hereinafter ICLE TTBER Comments].
[6] CMA Consultation, supra note 1, ¶ 2.20.
[7] Giuseppe Colangelo, Licensing Negotiation Groups: The New Antitrust Kid on the SEPs Block, 1 Eur. Competition J. 1, 1–19 (2026) [hereinafter Colangelo, LNGs].
[8] See, e.g., Ruud Peters, Igor Nikolic & Bowman Heiden, Designing SEP Licensing Negotiation Groups to Reduce Patent Holdout in 5G/IoT Markets, in 5G and Beyond: Intellectual Property and Competition Policy in the Internet of Things 161 (Jonathan M. Barnett & Sean M. O’Connor eds., Cambridge Univ. Press 2023) (‘Pools and joint purchasing agreements share the same antitrust concerns. The main risk is that the aggregation of substitute products or services would constitute a price-fixing cartel and amount to a “per se” restriction (US) or a restriction of competition “by object” (EU)…. The increased market power of such horizontal cooperation is another concern …’).
[9] Josh Lerner & Jean Tirole, Efficient Patent Pools, 94 Am. Econ. Rev. 691 (2004); see also Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, 1 Innovation Pol’y & Econ. 119, 134 (2000).
[10] See, e.g., Igor Nikolic, Licensing Negotiation Groups for SEPs: Collusive Technology Buyers Arrangements? Their Pitfalls and Reasonable Alternatives, Les Nouvelles 226 (2021); Colangelo, LNGs, supra note 7.
[11] Statement of Interest of the United States, Global Music Rights, LLC v. Radio Music License Comm., Inc., No. 2:16-cv-09051-TJH-AS (C.D. Cal. 5 Dec. 2019), ECF No. 111.
[12] Khushita Vasant, EU Guidance on Carmakers’ SEP Licensing ‘Unfortunate’, US DOJ’s Kallay Says, MLex (10 Oct. 2025), https://www.mlex.com/mlex/articles/2398760.
[13] Written Submissions of the International Center for Law & Economics as Intervener ¶¶ 4.4–4.5, Tesla, Inc. v. InterDigital Patent Holdings, Inc. & Avanci, LLC, UKSC/2025/0058 (U.K. Sup. Ct. 16 Mar. 2026) [hereinafter ICLE Tesla v. Avanci Submissions]; Robert P. Merges & Michael Mattioli, Measuring the Costs and Benefits of Patent Pools, 78 Ohio St. L.J. 281 (2017).
[14] Colangelo, LNGs, supra note 7 (explaining that coordination among downstream firms remains coordination among competitors, regardless of where it occurs in the supply chain).
[15] See, e.g., Alexander Galetovic, Stephen Haber & Ross Levine, An Empirical Examination of Patent Holdup, 11 J. Competition L. & Econ. 549 (2015).
[16] Justus Baron, Pere Arque-Castells, Amandine Leonard, Tim Pohlmann & Eric Sergheraert, Empirical Assessment of Potential Challenges in SEP Licensing (Eur. Comm’n, 27 Apr. 2023), doi:10.2873/19262 (finding no evidence that FRAND-licensing frictions reduce SEP owners’ incentives to contribute technology to standards or induce implementers to choose alternative standards).
[17] Colangelo, LNGs, supra note 7.
[18] Bowman Heiden & Justus Baron, The Economic Impact of Patent Holdout, 38 Harv. J.L. & Tech. 638 (2024); Kirti Gupta & Urška Petrovcic, Evidence of Systematic “Patent Holdout”, 38 Berkeley Tech. L.J. 575 (2023).
[19] Josef Drexl, Beatriz Conde Gallego & Daria Kim, Position Statement of the Max Planck Institute for Innovation and Competition of 25 April 2025 within the Framework of the Revision of the Technology Transfer Block Exemption Regulation and the Accompanying Guidelines, 74 GRUR Int’l 736 (2025) (‘A greater potential for individual delaying strategies arises if the members of the LNG retain the possibility of continuing bilateral negotiations with the aim of adapting the jointly negotiated outcome to the particular licensee’s circumstances once joint negotiations have concluded.’).
[20] Colangelo, LNGs, supra note 7.
[21] Case C-170/13, Huawei Techs. Co. v. ZTE Corp., ECLI:EU:C:2015:477 (16 July 2015).
[22] Communication from the Commission, Guidelines on the Application of Article 101 of the Treaty on the Functioning of the European Union to Technology Transfer Agreements, C/2025/6189, ¶¶ 321–322 (2025) [hereinafter Final EU TT Guidelines].
[23] Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1 (1984).
[24] ICLE Tesla v. Avanci Submissions, supra note 13, ¶ 7.5.
[25] Draft EU TT Guidelines, supra note 4, ¶¶ 300, 326.
[26] Final EU TT Guidelines, supra note 22, ¶¶ 318–322.
[27] Colangelo, LNGs, supra note 7.
[28] Final EU TT Guidelines, supra note 22, ¶¶ 321–322.
[29] CMA Consultation, supra note 1, ¶ 2.20.
[30] Vasant, supra note 12.
[31] U.S. Dep’t of Justice, Business Review Letter Re: Avanci 5G Platform 2–3, 21 (28 July 2020).
[32] CMA Consultation, supra note 1, ¶ 2.21.
[33] CMA Consultation, supra note 1, ¶¶ 2.20–2.21.