Microsoft gives FTC assurances about Nokia phone patents

Korea’s Fair Trade Commission (FTC) resumed reviewing approval of the merger of Microsoft and Nokia after Microsoft voluntarily said it would not raise patent fees on local smartphone manufacturers Thursday.

The FTC is reviewing the merger’s possible effect on fair competition amid concerns that Microsoft might exploit its patents as a smartphone manufacturer to weed out competitors like Samsung Electronics and LG Electronics.

Microsoft launched its own Windows phones, but it posed no threat to local smartphone producers. The merger with Nokia potentially puts Microsoft in direct competition with Samsung and LG, which make Android devices.

Nokia owns key patents in telecommunications and its Exchange ActiveSync protocol, which allows smartphones to open emails.

Yet the FTC’s review will not affect the 7.8 trillion won merger (worth about $7.1 billion), which has already been finalized and approved in the United States, EU, China and Taiwan.

China and Taiwan have reportedly approved the merger conditionally due to worries that Microsoft could still exploit its patent rights.

Microsoft, which acquired Nokia’s smartphone device business in September 2013, asked the FTC to review the merger last August.

The review process was suspended in September 2014 after the FTC decided the issue was highly technical.

According to the FTC, Microsoft asked for more time so it could consult with its partners.

On Thursday, Microsoft pledged it would not raise patent fees for the next seven years and will not exploit its patents with companies that have already signed cooperative contracts with Microsoft. The company said it will not share key management information with Nokia due to FTC anti-monopoly regulations.

Microsoft agreed to adhere to reasonable conditions when allowing local smartphone makers to use its patents and promised not to file a lawsuit requesting sales bans.

Accordingly, the FTC said Thursday it decided to accept the voluntary corrective measures proposed by Microsoft and proceed with voting to conditionally approve the merger between Microsoft and Nokia.

“We decided to resume the process of a consent decision for the merger, as we considered the fact that Microsoft’s voluntarily revised measure will be able to resolve concerns about unfair competition, possible market distortions and the company exploiting its patents,” said a spokesman for the FTC.

“From now on, we will continue to actively collect the opinions of various stakeholders in the process of making the consent decision.”

The FTC plans to announce the final consent decision soon. But local IT companies are still cautious about Microsoft’s voluntary corrective measures. Samsung Electronics is already in a legal battle with Microsoft over the acquisition of Nokia and the lawsuit is mainly about patent fees.

The FTC said it will monitor whether the company follows through on its promises and will deal with any violations.

BY kim jung-yoon [kjy@joongang.co.kr]