Taiwan FTC Conditionally Clears Microsoft Acquisition of Nokia

On February 19, 2014, Taiwan’s Fair Trade Commission (“TFTC”) conditionally cleared Microsoft’s proposed acquisition of Nokia. The TFTC believed that no obvious impact on the structure of the market will result due to the deal, except for potential incentives to increase patent licensing royalty fees. As a result, the TFTC laid down two conditions before the acquisition could proceed:

• Microsoft should not engage in unfair pricing and discriminatory treatment involving smartphone-related patent licensing to hinder smart mobile device markers’ free choice of mobile operating system.

• Nokia should continue to comply with fair, reasonable, and non-discriminatory (FRAND) principles regarding licensing of standard essential patents. If Nokia does transfer these patents to other companies, it must ensure that those companies follow the same principles when licensing.

The TFTC noted that Microsoft is unlikely to discontinue licensing its Windows Phone mobile operating system as a result of the merger, because both the global and domestic market share of Windows Phone was “extremely low,” standing at 3.4% and 2.2% respectively. In addition, the TFTC noted that Microsoft’s acquisition of Nokia’s device and service operations creates a “third ecosystem other than Apple’s iOS and Google’s Android.”