July 2025 – The European Commission issued an informal guidance letter to the Automotive Licensing Negotiation Group (ALNG), marking the first application of the Informal Guidance Notice allowing for undertakings to approach the Commission with novel or unresolved issues concerning European competition law.
Licensing Negotiation Groups (LNGs) are a novel form of agreement and share certain characteristics with joint purchasing agreements – only that they aim at licensing intellectual property rights instead of purchasing goods or services. ALNG, formed by BMW, Volkswagen, ThyssenKrupp and Mercedes-Benz, is the first of its kind in the EU, aimed at licensing standard essential patents (SEPs), which are patents that are required to implement a certain standard in a product.
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements, decisions of associations of undertakings, and other restrictive business practices that may affect trade and prevent, restrict or distort competition within the EU Single Market. Joint purchasing agreements are covered by the Commission's Guidelines on Horizontal Cooperation Agreements, but there is no such guidance available for licensing negotiation groups. Therefore, as a novel issue, ALNG requested the Commission to provide an informal guidance letter as regards the competition law aspects of such agreements.
In its guidance letter, the Commission considered that ALNG does not raise concerns under Article 101 TFEU because:
- It is unlikely that ALNG members have a combined market share that exceeds 15% of the total relevant demand on the purchasing market(s), since the patented technologies are utilised in numerous sectors and industries;
- Even if the combined market share of ALNG members in the selling market(s) is likely to be higher than 15%, the Commission considers that the ALNG is unlikely to lead to appreciable restrictive effects on competition in such market(s), chiefly because the cost of licensing SEPs represents a minimal proportion of the total cost of the downstream products;
- The ALNG aims to increase efficiency in the licensing of SEPs related to digital technologies, which is expected to contribute to Europe's decarbonisation goals and to the transition to net-zero emissions by 2050, as set out in the European Commission's Clean Industrial Deal.
The Commission stated, however, that its assessment rests on the basis that:
- ALNG negotiates for licenses for non-automotive standards where its members' combined market share is under 15% of the total SEP or standard demand;
- ALNG is open to both car manufacturers and component suppliers - as members of the automotive industry - to join them in the licensing negotiation group;
- SEP holders are free to enter into a negotiation with ALNG and to terminate it at any time; and
- ALNG members exchange only information objectively necessary for joint licensing negotiations, without sharing any commercially sensitive details.
It must be noted that the observations contained in the informal guidance letter do not apply directly to other licensing negotiation groups (however, according to the Commission, the ALNG is the only licensing negotiation group within the EU for now).
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