The inquiry was launched in 2003, following a complaint by
FIPCOM (the Federation of Interested Parties in fair Competition in
the Optical Media sector), an association of European manufacturers
of CD-Recordable discs. The complaint alleged that the terms and
conditions of licensing of the CD-R technology violated the EC
Treaty competition rules on restrictive business practices and
abuses of dominant positions.
Philips revised the programmes to ensure that all the necessary
information concerning the licensed technology is available and
that the programmes are managed in a fair and non-discriminatory
way. In view of these improvements and the withdrawal of its
complaint by FIPCOM subsequent to settlement negotiations, the
Commission has decided to close the case.
The new licensing conditions offered by Philips are likely to
bring about lower prices and more transparency for millions of
consumers of recordable CDs. Fair and non-discriminatory terms of
licensing are essential to ensure that technology license
agreements do not restrict competition.
Since 1996 Philips Electronics has offered European
manufacturers a joint portfolio license which includes its own CD-R
disc patents as well as those of Sony and Taiyo Yuden, a Japanese
technology company. Philips undertook to discontinue the joint
patent portfolio license programme in Europe with effect from 15
December 2005.
In addition, Philips has, beginning in 2001, offered an
individual license, the Philips Only License Agreement (PLA), which
is limited to its own CD-R patents. The revisions proposed by
Philips to this agreement are considered satisfactory. The most
important changes in the new licensing agreement are:
- making available on its website summary reports of independent
experts regarding those Philips patents that are essential to
produce CD-R discs;
- adding the explicit obligation for Philips to address technical
problems associated with the management of the CD-R standard;
and
- updating the CD-R standard to clarify that discs that do not
use Philips’ Multi Speed proprietary technology but alternative
high speed recording technologies qualify as CD-R discs.
Philips also reduced the level of royalty from 4.5 US cents to
2.5 US cents per disc, and undertook to apply this new rate
retroactively from 1 October 2005 to the licensees that are
compliant with the licensing program and have paid all royalties
due.
The Commission intends to continue to closely monitor existing
or new technology pools, in particular those that support or
establish a de facto or a de jure industry standard in order to
ensure that they comply with Community competition rules.
