South Korean watchdog gives Microsoft-Nokia approval after long patent abuse review

South Korea's Fair Trade Commission has approved Microsoft's acquisition of Nokia's device business under conditions that put a number of restrictions on Redmond's use of patents against local companies.

South Korea's Fair Trade Commission (FTC) has finally approved Microsoft's acquisition of Nokia's device business under conditions that will "block the possibility of Microsoft abusing its patents."

Local South Korean authorities have reviewed the matter for near two years since Microsoft made the global announcement in 2013. The company filed for approval to the FTC in November 11 of that year.

The FTC's review has taken a long time because if Microsoft delved into production through Nokia, it would have made the company form a "competitive relationship" with local smartphone makers -- Samsung, LG and Pantech -- and might "abuse" its patents against them, the government concluded after its initial review.

Microsoft was already in a "business collaboration agreement" with local manufacturers that could serve as an excuse to "share trade secrets," the FTC said.

The software giant had voluntarily turned in solutions to mitigate anti-competitive issues last year. The watchdog considered them insufficient, but nonetheless started the approval process earlier this year after considerations of Microsoft's willingness to alter and supplement further during review.

The FTC said it has fully listened to all opinions of parties as well as experts during the review. It said that tablet patents were added to non-abuse clauses.

It also got an agreement from Microsoft to not file sales bans on Korean companies locally, as well as abroad.

Review by other government agencies during May and June-- including the prosecution service, similar to the US district attorney -- was completed without opposition.

Under the deal, Microsoft is also not allowed to increase royalties unfairly against South Korean companies -- standard essential patents (SEP) must be given in Fair, Reasonable and Non-Discriminatory (FRAND) terms -- or request "sensitive" trade secrets through existing collaboration agreements.

For non-SEPs, royalties will be set lower than the market price and Microsoft will not be allowed to give its patents to a third party for the next five years under the term. Microsoft's patent for Exchange ActiveSync (EAS), a must-have to run Android OS, was among the list.

South Korea has been accused of "protectionism" for defending the interest of local firms and for its strict regulations against foreign companies. It denies this and says different countries have different laws.

A FTC spokesman said he had nothing to add to the announcement. Microsoft was unavailable for comment.

Nokia said in a statement it was glad the FTC supported its view that no restrictions should be placed on it as the selling party.

"Nokia is pleased with the decision of the Korean Fair Trade Commission in its investigation into the sale of our Devices & Services business to Microsoft," it said. "Nokia's licensing practices have been reviewed by authorities around the world; none have ever asked for changes to be made and we have agreed licenses with more than 80 companies on wireless standard essential patents, for which our commitments made to license on FRAND terms remain in force."

"This was the last remaining regulatory review of the transaction and so with this decision it is now fully cleared around the world."


Update: Added additional comments from Nokia.