Intellectual property/ telecommunications: Commission clears a concentration between Nortel and Norweb in the telecommunications sector

The European Commission has decided to approve a new joint venture which will be jointly controlled by a British company, Norweb, a subsidiary of United Utilities, and Nortel, a subsidiary of a Canadian corporation Northern Telecom Limited. Nortel is engaged in the business of designing, manufacturing and selling telecommunications equipment, systems and networks. The company's product range includes public and private telecommunications switching equipment, transmission equipment and mobile telephony equipment. Norweb supplies electricity and telephone services.

The joint venture will be active in the development, manufacture and sale of a new telecommunications product, Direct Power Link (DPL) which allows data signals to be transmitted over electricity lines. DPL products will provide an alternative to a number of other access technologies for Internet access, such as the traditional telephone copper cable, fast modems, ADSL (Asymmetric Digital Subscriber Line), HDSL (Hierarchical Digital Subscriber Line), cable modems and wireless broadband technologies via satellite or stationary ground stations.

In assessing the compatibility of the joint venture with EU competition law, the Commission examined the impact of the parties' patents on the market. In particular Norweb is in possession of, or in the process of applying for, DPL technology patents. The significance of the decision is that, whilst the Commission acknowledged that these patents might impair third party entry to the market, it concluded that the patents exist independently of the joint venture. The Commission therefore decided that the concentration does not create or strengthen a dominant position in the common market or in a substantial part of it.