In standard-essential patent (SEP) licensing, every procedural tweak is also a skirmish over bargaining power. That is what makes licensing negotiation groups (LNGs) more than an obscure acronym in the European Commission’s 2026 Technology Transfer Block Exemption Regulation (TTBER) and accompanying Guidelines (TTGs). LNGs would allow technology implementers to bargain collectively with rights holders. Depending on whom you ask, that is either a sensible way to reduce transaction costs—or a buyer cartel with a compliance memo.
The draft TTGs introduced a dedicated section on LNGs and, more notably, offered a soft antitrust safe harbor. In practice, qualifying LNGs would have avoided a full case-by-case assessment if they satisfied a defined set of conditions.
That approach did not come out of nowhere. A few months earlier, the European Commission signaled its position in an informal guidance letter issued jointly with the German competition authority, addressing the creation of the Automotive Licensing Negotiation Group.
That episode sets the stage for this post. It begins by situating LNGs within the broader SEP debate. It then examines the competition-law risks they raise, the limits of analogizing them to patent pools, and their uneasy fit with the Huawei framework.
Finally, it turns to the final TTGs. While the Commission dropped the proposed safe harbor, it kept a dedicated section on LNGs—raising the obvious question: was the intervention worth it?
LNGs: Technical Fix or SEP Policy Redux?
The Commission’s approach drew sharp criticism. Many viewed LNGs not as a technical clarification, but as the latest move in the longrunning SEP wars. On that account, the proposal looked less like guidance and more like a backdoor revival of debates that followed the collapse of the highly contested EU SEP Regulation.
As argued in a previous paper, LNGs resemble a consolation prize for the automotive sector. Firms in that sector had strongly backed the withdrawn Regulation. LNGs would deliver part of what that proposal promised: greater collective leverage for implementers in negotiations with SEP holders.
The logic tracks the earlier proposal. Both rest on the view that SEP licensing suffers from hold-up. The remedy, in turn, shifts bargaining power from SEP holders to licensees—ostensibly to rein in what critics characterize as excessive licensing prices.
When ‘Collective Bargaining’ Starts to Look Like a Cartel
Granting favorable antitrust treatment to LNGs is no neutral move. Collective buying arrangements raise familiar competition-law concerns. They can facilitate exchanges of commercially sensitive information and enable coordination on core competitive parameters, including price and output.
U.S. antitrust authorities have framed the issue more bluntly. In recent remarks, the U.S. Justice Department (DOJ) singled out the Commission’s comfort letter for the Automotive LNG as a regulatory intervention that appears to permit collusive licensing negotiation groups—conduct it characterized as buyer-cartel behavior under U.S. antitrust law.
The concern extends beyond any single dispute. By offering regulatory comfort to coordinated bargaining, such interventions risk spillover effects. They can anchor expectations and encourage firms to seek similar carveouts, rather than comply with antitrust law.
Reverse Patent Pools? Not So Fast
The proposed LNG section in the revised TTGs rests on a simple claim: the logic of technology pools extends to other forms of aggregation. On this view, LNGs deliver similar procompetitive benefits. They act as a one-stop shop, lower transaction costs, and function as a kind of reverse patent pool—counterbalancing the alleged market power of SEP holders or existing pools.
That analogy does not hold. Pools and LNGs aggregate fundamentally different things.
Patent pools combine complements. Each patent covers a distinct slice of a standard, and licensees need all of them to implement the technology. By bundling these inputs, pools address the familiar Cournot-complements and patent-thicket problems. The result is lower aggregate royalties and easier access to interlocking technologies. That market failure—and its fix—explains why antitrust law generally treats pools favorably.
LNGs do the opposite. They aggregate substitutes: competing implementers, each capable of negotiating its own license, band together to coordinate purchasing.
Pooling patents and pooling licensees are not mirror-image exercises. The former integrates inputs that are useless on their own. The latter consolidates buyer-side bargaining power among firms that would otherwise compete for the same inputs. The competitive effects run in opposite directions.
Pools mitigate double marginalization. LNGs risk creating monopsony power and providing cover for collusion among downstream rivals. The safeguards that discipline pools—limits to essential, complementary patents; fair, reasonable, and non-discriminatory (FRAND) commitments; and nondiscrimination duties toward licensees—have no real counterpart on the buyer side. The draft Guidelines’ procedural constraints—open access, limits on information exchange, and bans on collective boycotts—do not replicate them.
From Hold-Up to Group Hold-Out
To the extent LNGs rest on hold-up theory, they risk overlooking the mirror-image problem of hold-out. Worse, they may enable it—collectively. The risk is especially acute where LNG members can walk away after joint negotiations and pursue bilateral talks with the SEP holder. In that scenario, firms can free-ride on the group process, then delay—or refuse—to conclude individual licenses.
One obvious fix would have been to bind members to the outcome of joint negotiations. At a minimum, LNGs could require members to conclude licenses within a defined period after negotiations end—though even that would be a second-best solution compared to a world without LNGs.
The Commission did not go that route. It raised no objection to the Automotive LNG’s operating rules, which do not require members to accept the negotiated agreement. If a member rejects the outcome, the parties revert to the status quo ante, as if the LNG never existed, leaving the SEP holder and that firm to negotiate bilaterally. The final TTGs take the same approach. They impose no requirement that LNG members be bound by the result of collective negotiations.
That choice creates tension with the Huawei framework, which remains the central reference point for SEP licensing in the European Union. The framework aims to balance hold-up and hold-out through the willing-licensee test. How that test applies when negotiations proceed collectively—yet individual implementers remain free to reject the outcome and go it alone—remains an open question.
No Safe Harbor, Same Drift
In response to the criticism, the Commission ultimately dropped the draft safe harbor for LNGs. The final TTGs still include a dedicated section, though. It maps out potential pro- and anticompetitive effects, draws a line between genuine LNGs and buyer cartels, and identifies the factors relevant under Article 101.
The final text also engages—at least briefly—with Huawei. Paragraph 322 acknowledges that LNGs may facilitate coordinated delay during negotiations. It adds that implementers pursuing such a strategy may struggle to rely on Article 102 of the Treaty on the Functioning of the European Union (TFEU) as a defense against an injunction sought by an SEP holder that has committed to license on FRAND terms.
That is an improvement over the draft safe harbor. It does not, however, resolve the underlying problem. By giving LNGs a bespoke framework, the Guidelines normalize buyer-side coordination in SEP licensing. The debate shifts from whether such coordination should be allowed to how it should be designed.
The Commission’s safeguards—transparency, limits on information exchange, and case-by-case effects analysis—do not fully address the core concern. LNGs can aggregate implementers’ bargaining power while leaving them free to reject the outcome, prolong disputes, and push royalties downward.
The contrast with the United Kingdom is telling. In its draft Guidelines under consultation, the UK Competition and Markets Authority (CMA) declined to offer LNG-specific guidance. It opted instead for a case-by-case approach grounded in the facts and economic context of each arrangement.
The safe harbor is gone. The detour remains. Alas, in these matters, detours have an unfortunate habit of becoming the road.
