Following a complaint by iBall, the Competition Commission of India (CCI) has ordered a probe against the Swedish telecom giant Ericsson for demanding higher royalty for its GSM technology-related patents.
According to the prima facie investigation, CCI has found that the royalty rate charged by Ericsson has no linkage to the functionality of patented product. “Rather it has linkage to the final price of the manufactured product in which the patent is being used,” CCI said. “The company is imposing royalties linked with the cost of manufacturing product. Charging of two different license fees per phone for use of the same technology, prima facie, appears to be discriminatory,” it added.
“The royalty rates demanded by Ericsson to iBall goes against FRAND (fair, reasonable and non-discriminatory) terms,” CCI said.
Forcing a party to follow non-disclosure agreement and imposing heavy royalty amount to abuse of dominance in violation of the relevant section of the Competition Act. As the commission finds evidence against Ericsson, the case is fit to be investigated by Director General. CCI has asked the Director General to conduct the probe in next 60 days.
Ericsson is a dominant player in GSM market and also in telecom technology. The company possesses a large number of GSM patents with it. Out of the 33,000 patents it holds, 400 were granted by India. The company also stands premiere in Standard Essential Patents (SEPs) for 2G, 3G and 4G, mainly the technologies used for smartphones and tablets. As there are no alternative technology available for most of the patents held by Ericsson, the player enjoys complete dominance in the market.