The evidence and analysis of monopsony power, including but not limited to, in labor markets #FTC-2018-0054-D-0005

Submission Number:
Francisco Mingorance
IP Europe
Outside the United States
Initiative Name:
The evidence and analysis of monopsony power, including but not limited to, in labor markets
IP Europe Comments to the FTC Question #7: Evidence and analysis of monopsony power, including but not limited to, in labor markets; The question asks for evidence regarding the existence and exercise of buyer monopsony or market power in properly defined markets Over the years, antitrust enforcers have not paid much attention to the problem of anticompetitive exercise of monopsony (buyer) power, focusing instead almost exclusively on monopoly (seller) power. The exercise of monopsony power can, however, have an equally negative impact on competition as the exercise of monopoly power. One example of evidence of anticompetitive exercise of buyer power involves the 2015 revision of the patent policy of patent development organizations called IEEE-SA. The revision was initiated and dominated by a group of buyers-users of standardized technology. The process and the Business Review Letter that followed were criticized heavily by many(1). It resulted in a policy that significantly favors the interests of technology users and significantly reduces prices for standard essential patents. The interesting aspect is the evidence that has built up in the 3 years since the new policy took effect. Since the policy change, statistics show that a growing number of patent holders, i.e. sellers of standardized technology, have submitted negative patent statements (known as letters of assurance of LOAs) to IEEE, informing that they do not intent to offer F/RAND access to any of patent claims that would be essential to IEEE standards under the new policy(2). The majority of letters of assurance submitted for WiFi standards between 1/1/2016 and 6/30/2018 is negative. This means that the voluntary F/RAND commitment that has been repeatedly recognized by antitrust courts and agencies as a tool to prevent anticompetitive exercise of market power where such exists, is disappearing in the context of IEEE. This is an empirical example of anticompetitive effects resulting from the exercise of monopsony power. A U.S. Department of Justice Antitrust Division Deputy Assistant Attorney General has recently acknowledged this problem. It is therefore suggested that the hearings explore the potential for exercise of buyer power by users of standardized technology (3). References: (1) See e.g. Roy E. Hoffinger, THE 2015 DOJ IEEE BUSINESS REVIEW LETTER: THE TRIUMPH OF INDUSTRIAL POLICY PREFERENCES OVER LAW AND EVIDENCE, Competition Policy International (CPI) Antitrust Chronicle March 2015 (2) available at /HoffingerMar-152.pdf; Lisa Kimmel, STANDARDS, PATENT POLICIES, AND ANTITRUST: A CRITIQUE OF IEEE-II, the American Bar Association (ABA) Antitrust Magazine (Summer 2015) available at Stuart M. Chemtob, CARTE BLANCHE FOR SSOS? THE ANTITRUST DIVISIONS BUSINESS REVIEW LETTER ON THE IEEES PATENT POLICY UPDATE, (CPI) Antitrust Chronicle March 2015 (1) available at; Hugh M. Hollman, IEEE BUSINESS REVIEW LETTER: THE DOJ REVEALS ITS HAND, Competition Policy International (CPI) Antitrust Chronicle March 2015 (2) available at; Luke Froeb and Mikhael Shor, INNOVATORS, IMPLEMENTERS, AND TWO-SIDED HOLD-UP, the American Bar Association (ABA) Antitrust Source (August 2015) available at source/aug15_froeb_7_21f.authcheckdam.pdf; J. Gregory Sidak, THE ANTITRUST DIVISIONS DEVALUATION OF STANDARD-ESSENTIAL PATENTS, 104 Georgetown Law Journal Online 48 (2015) available at Gregory Sidak Letter to DOJ, available at proposed_ieee_bylaw_amendments_affecting_frand_licensing_of_seps.pdf (pp 1-2) (2) See e.g. Development of Innovative New Standards Jeopardized by IEEE patent Policy / Keith Mallinson (September 2017), available at _IEEE_LOA_report.pdf; The IEEE controversial policy on Standard Essential Patents the empirical record since adoption / Ron Katznelson (October 2016, updated September 2017) available at; Commercial Economic impacts from IPR Policy Changes / Ian Corden, Tim Miller, Sarongrat Wongsaroj, Sam Wood (March 2017) available at (3) Andrew Finch, Assistant Attorney General, Antitrust Division, U.S. Dept of Justice, Remarks Delivered at The Heritage Foundation: TRUMP ANTITRUST POLICY AFTER ONE YEAR (February 23, 2018) available at