South Korea’s Fair Trade Commission (FTC) has approved the acquisition of Nokia Corporation (ADR) (NYSE:NOK) by Microsoft Corporation (NASDAQ:MSFT) subject to conditions that will prevent the possibility of Microsoft misusing its patents. South Korean local authorities have been looking into the matter for almost two years post Microsoft making the global announcement of its acquisition in 2013. The US Company sought approval from the FTC on November 11, 2013.
In exchange for approving Microsoft’s intended acquisition of Nokia’s handset enterprise, the company has consented to put a limit on the royalties Samsung and other South Korean firms shell out for patents of the merged organizations over the coming seven years.
The agreement urges Microsoft to refrain from filing lawsuits against South Korean handset manufacturers over infringement of patents. The company on its own turned solutions to alleviate anti-competitive issues the previous year.
In the watch dog’s opinion, the solutions were not good enough. However, they initiated the approval process at the beginning of this year after taking into account Microsoft’s flexibility to change certain provisions during the review.
As part of the deal, Microsoft is not permitted to enforce royalties unfairly against South Korean firms. Standard Essential patents should be given in fair, reasonable and non-discriminatory terms. In case of “sensitive” trade secrets, the former must be requested via existing collaboration agreement. Non-SEPs royalties have to be lesser than the market price. Microsoft is not permitted to transfer its patents to a third party for the coming five years.
As per the FTC, it has given a fair hearing to all opinions of involved parties as well as industry experts during the review. It also obtained an agreement from Microsoft to not enforce sales ban on South Korean companies in the local market as well as abroad.
South Korea has been charged with following a protectionist policy. The latter is regarding it vigorous defending of local firms and stringent laws against foreign organizations. However the nation asserts that it is not the case.
Sources: zdnet, koreatimes