What the FRANDT?! Understanding the Regulation of Pricing Power in the Single Market for ESG Ratings
Keywords:
excessive pricing, FRAND, ESG ratings, oligopoly pricing, investment funds, sustainable financeAbstract
The European co-legislators have adopted the Regulation on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities (ESGR). The ESGR requires fees charged by rating providers to be fair, reasonable, transparent and non-discriminatory, to reduce the ability of providers to exploit their pricing power.
This pricing rule, which belongs to a class of rules known as FRAND(T) rules, does not provide any context or guidance that clarifies how to apply the pricing policy to a provider’s pricing policy. As a consequence, providers are facing considerable legal uncertainty.
This article applies established interpretation methods, including a comparative analysis using other FRAND(T) rules in the body of European Union financial and digital regulation, to guide the interpretation of the pricing rule in practice.
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