The EU just blessed a car industry patent cartel—and the U.S. DOJ is fighting back

Facing ever-increasing competition from Chinese automakers, European auto manufacturers are exploring ways to drastically reduce what theyavoid having to pay for licenses for their use of critical technology standards——such as in-vehicle 5G or Wi-Fi——that are essentially required for modern cars. And it looks like the European Union will let them get away with not paying, to the detriment of innovators around the world, including the U.S. Licensing royalties for technologies such as 5G or Wi-Fi compensate innovators for use of those important technologies and also support continued advancements of those technologies, which ultimately benefit both auto manufacturers and consumers. Contributors to these technology standards are located in countries across the globe. Although the EU has frequently voiced its support of the innovation economy, recent EU actions on innovation appear to discourage it. Rather than take steps to encourage innovation in the EU so that the continent can continue to benefit directly from such innovation, it has decided instead to help a subset of auto manufacturers undermine the innovation economy in Europe and globally by facilitating something that would more or less function akin to aa cartel. Last year, the European Commission issued a so-called “Comfort Letter” to an Automotive Licensing Negotiation Group (ALNG), which effectively permitted it to proceed in its quest to collectively negotiate IP licenses for participating European automobile manufacturers. The ultimate objective of such horizontal collusion is to make the ALNG the sole European buyer — a monopsony, in effect — collectively exercising market power among competitors to reduce licensing payments. Other major economies do not share the European Commission’s view on such arrangements. For instance, the U.S. Department of Justice (DOJ) has publicly taken a contrary position on the ALNG, indicating that the structure proposed in the Comfort Letter w