Since becoming fully functional in October of 2009, the CCI has brought two investigations involving SEPs, one in November 2013, and the other in January 2014, both against Ericsson based on allegations that it violated its FRAND commitments by imposing discriminatory and "excessive" royalty rates and using Non-Disclosure Agreements (NDAs). According to the CCI, "forcing a party to execute an NDA" and "imposing excessive and unfair royalty rates" constitutes "prima facie" abuse of dominance and violation of section 4 of the Indian Competition Act, as does "imposing a jurisdiction clause debarring complainants from getting disputes adjudicated in the country where both parties were in business."
In both matters, the CCI stated that "prima facie the relevant product market" is "'the provision of SEP(s) for 2G, 3G and 4G technologies in GSM standard compliant mobile communication devices,' in India, in which "prima facie it is apparent that Ericsson was dominant." The investigations allege that Ericsson "seems to be acting contrary to the FRAND terms by imposing royalties linked with cost of product of user for its patents." Thus, "for the use of GSM chip in a phone costing Rs 100, royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, royalty would be Rs. 12.5." According to the CCI, "charging of two different license fees per unit phone for use of the same technology prima facie is discriminatory and also reflects excessive pricing vis-à-vis high cost phones." Furthermore, contends the CCI, "transparency is the hallmark of fairness, and" alleging that, Ericsson's use of NDAs "is contrary to the spirit of applying FRAND terms fairly and uniformly to similarly placed players."
The second investigation further alleges that, although Ericsson publicly claims that it offers a broadly uniform rate to all similarly placed potential licensees, its refusal to share commercial terms and royalty payments on the grounds of NDAs is "strongly suggestive of the fact that different royalty rates/commercial terms were being offered to the potential licensees belong to the same category."
