Competition Policy for Industry Standards

Abstract

AbstractCompatibility standards create consumer benefits by enabling components to interoperate and allowing suppliers of compatible components to achieve efficiencies from scale and network effects. Quality and safety standards inform consumers and can prevent the sale of shoddy or potentially hazardous products. However, standards can impose costs in some situations by limiting consumer choice. Furthermore, the activity of standard setting often involves cooperation among competitors and may facilitate the exercise of market power. This chapter surveys competition issues raised by the development of industry standards, whether accomplished through a formal standard-setting committee structure or by the activities of a single sponsor. A particular focus is on the implications for competition and consumer welfare when products that implement a standard may infringe proprietary intellectual property rights.