Update on licensing negotiation groups: European Commission issues guidance letter supporting joint licensing negotiations in the automotive sector

In an article published in the summer of 2024, we previously reported on the declaration by the German Federal Cartel Office (Bundeskartellamt; FCO) from June 2024 that it would tolerate the establishment of the Automotive Licensing Negotiation Group (ALNG) by BMW, Mercedes-Benz, Volkswagen, and Thyssenkrupp – a licensing negotiation group (LNG) concerning standard essential patents (SEPs) for mobile communications technologies in the automotive sector.

A little over a year later, the European Commission (Commission) has now issued an informal guidance letter – the first of its kind under the 2022 revised Informal Guidance Notice – to the ALNG, similarly concluding that the ALNG likely complies with European antitrust law (see the press release dated 9 July 2025).

This guidance letter by the Commission is an important milestone, since it signifies that – under certain conditions (see below) – LNGs comply with European antitrust law and could become a viable option for SEP licensing negotiations across Europe and different sectors in the future.

ALNG and its compatibility with European antitrust law

The guidance letter was issued by the Commission in response to a request by the companies involved in the ALNG. The Commission was asked to assess whether the formation of the ALNG would comply with Article 101 TFEU, which generally prohibits coordination between competitors and also applies to joint purchasing agreements (which share certain characteristics with LNGs).

The ALNG aims to establish an industry-led, coordinated forum for automotive OEMs and suppliers to jointly negotiate licences with SEP holders, particularly for digital connectivity technologies such as 5G. The initiative claims to reduce transaction costs, avoid litigation, and support fair, reasonable and non-discriminatory (FRAND) licensing practices throughout the supply chain.

The Commission’s (non-binding) guidance letter outlines several conditions under which it considers the ALNG compliant with European antitrust law:

• Limited market coverage: The ALNG negotiates licences for standards not developed specifically for the automotive sector and its members do not represent more than 15% of total demand in the relevant licensing market(s).
• Open and transparent participation: Membership of the ALNG is open to other interested automotive players, including suppliers.
• Voluntary negotiations: SEP holders are free to negotiate with the ALNG and can alternatively choose to negotiate bilaterally with individual ALNG members.
• Compliance safeguards: The ALNG members must not exchange information beyond what is strictly necessary for the licensing process and no commercially sensitive information may be shared between them.

These conditions mirror the guidance previously issued by the FCO in 2024. Importantly however, the Commission’s letter applies across the EU and thus provides clarity on a much broader scope.

Precedent for LNGs beyond the automotive sector?

The Commission’s guidance sends a clear signal to the market: structured cooperation between licensees through LNGs is not per se problematic under European antitrust law. The ALNG guidance letter could serve as a blueprint for LNGs in other sectors (such as consumer electronics, IoT, or industrial automation) where a large number of SEPs must be licensed.

The guidance letter is likely to be welcomed by implementers. Certainly, it provides greater legal certainty and a more predictable, consistent framework for joint licensing initiatives. For SEP holders on the other hand, the guidance letter may require adapting licensing strategies if indeed LNGs become a more popular option for licensing among implementers – although bilateral negotiations must remain an option for SEP holders according to both the Commission’s and FCO’s guidance.

Whether LNGs ultimately succeed as a tool for licensing SEPs depends on the willingness of SEP holders (and patent pools or other joint licensing initiatives on the SEP holders’ side) to negotiate with LNGs as their counterparts.