CADE investigates Ericsson for antitrust violations

On 23 April, the Administrative Council for Economic Defense (CADE) heard the appeal from Motorola and Lenovo against Ericsson for abuse of dominant position in the licencing of standard-essential patents (SEPs) for 5G networks. 

The company refused to license independently essential patents in Brazil, requiring the signature of a global licensing agreement under unfair conditions. 

According to the appellants, the practice can be considered abuse of dominant position and discriminatory, since it disrespects international commitments made in the scope of SEPs licensing. These are essential technology patents used to comply with the technical standards established in a fair, reasonable, and non-discriminatory fashion.

During the course of the case, the parties signed a global licensing agreement, which led to the dismissal of the appeal. However, the Tribunal of CADE recommended the Office of the Superintendent General to launch an administrative enquiry due to the collective nature of the legal interests protected by the Brazilian Competition Law.

According to Commissioner Gustavo Augusto, the rapporteur of the case, there was evidence of price discrimination and imposition of potentially abusive trading conditions that could eliminate players in the 5G network market.

Mr Augusto highlighted that the abuse of SEPs may be considered an antitrust violation, especially when these patents are essential to enter standardised markets, such as 5G mobile networks. He also mentioned that the case addresses patents that are essential to the 5G market, which are owned by a company with dominant position in the sector of telecom infrastructure.

In addition, his vote states that, although the appeal was dismissed due to the signature of an agreement among the parties, there would still be evidence of antitrust violation, which requires further investigation.

Commissioner Victor Oliveira Fernandes supported a deeper analysis on the topic to better understand when an injunction can lead to an abuse of dominant position. “In fact, this antitrust case is a matter for which CADE needs to establish a guideline,” he said.

Thus, evidence pointed to the need for in-depth analyses to investigate possible anticompetitive practices such as refusal to supply goods or services, abuse of either industrial or intellectual rights, and obstructions to competitors’ development.