E.U. gives Google-Motorola deal the green light

The acquisition has been approved without conditions, but the European Commission warns it will not tolerate essential patent misuse

European regulators have given Google the green light to take over Motorola Mobility. The $12.5 billion deal faced strong opposition from open-source and consumer rights advocates, but the European Commission -- the European Union's executive arm -- announced today that the acquisition could go ahead, without conditions.

By buying Motorola Mobility, Google will gain control of about 17,000 smartphone patents, including standard-essential patents, but the commission approved the transaction after its investigation showed that it would not significantly change the market situation in respect of operating systems and patents for smartphones.

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Essential patents, such as 3G and GSM, are those required for smartphones to operate according to formal industry standards. Because they are crucial for all market providers, standard-setting organizations require the holders of standard essential patents to license them to any interested third parties on fair, reasonable, and nondiscriminatory (FRAND) terms. The European Commission also expects strict adherence to FRAND principles.

In approving the merger, Competition Commissioner Joaquín Almunia warned that the commission "will continue to keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents." Speaking in Paris on Friday, he also said that he was prepared to use all measures available, such as fines of up to 10 percent of a company's global turnover, to enforce the rules. The commission is already involved in a formal investigation of Samsung Electronics for misuse of essential patents in its battle with Apple.

"Standardization processes must be fair and transparent, so that they are not in the hands of established firms willing to impose their technologies. But it is not enough. We must also ensure that, once they hold standard essential patents, companies give effective access on fair, reasonable, and nondiscriminatory terms," said Almunia.

Google has pledged to license its newly acquired Motorola patents on FRAND terms. However, in a letter to 15 standards bodies, Google also listed the exceptions for when it would abandon this promise and would continue to pursue injunctions. Patent expert Florian Mueller says the letter changes nothing: "Google is basically saying that it will do exactly what Motorola is already doing now."

The approval news comes as mobile phone leaders Apple, Microsoft, Google, and Samsung struggle for dominance with countless court cases ongoing over alleged patent violations. Google's Android smartphone operating system dominates the mobile market with a 38 percent share compared to Apple iPhone's 27 percent.

In its review, the commission cooperated with several competition authorities, in particular with the U.S. Department of Justice, which is expected to give its own approval later this week.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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