23rd Mar 2018

Microsoft case sets precedent, says Brussels

  • A happy commissioner (Photo: EUobserver)

An EU court has upheld a European Commission decision to fine software giant Microsoft €497 million for abusing its dominant market position and to order the US-based company to share information on its programming systems.

The EU's second highest court – the Court of First Instance (CFI) - on Monday (17 September) went against Microsoft's appeal case to annul the EU executive's 2004 decision, with Brussels calling it an "important precedent" for other antitrust cases.

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"The court…essentially upholds the commission's decision finding that Microsoft abused its dominant position," the CFI stated, adding that it had annulled certain parts of the decision relating to the appointment of a so-called "monitoring trustee", which it said had no legal basis in EU law.

The EU executive welcomed the ruling. Commission president Jose Manuel Barroso said that the judgment "confirms the objectivity and the credibility of the commission's competition policy."

"This policy protects the European consumer interest and ensures fair competition between businesses in the [EU's] internal market," he said in a statement after the verdict.

"Today's court ruling…shows that the Commission was right to take its decision, and right to take firm action to enforce that decision," EU anti-trust commissioner Neelie Kroes told journalists in Brussels.

"This is an important precedent, not just for this particular product on this particular market," she said, adding that the EU executive will take the background of the court decision into account in ongoing and future anti-trust cases.

Case has impact on Microsoft's future

Microsoft expressed disappointment with the verdict and said it would evaluate the ruling before deciding on whether to appeal the CFI verdict.

"I think we need to read the decision before we make any kind of decisions," Microsoft's chief lawyer Brad Smith told journalists after the ruling.

"This decision…certainly has a great deal to say about the future of our company, our industry and competition law…in Europe," he added.

Without being too specific, he explained that Microsoft had to think about the message which the court ruling gave also in a "more general sense."

"The first and most important for us to address [now]…is what we are doing and will do to ensure that we comply with this decision," Mr Smith said, adding that Microsoft "may need to take additional steps because of today's decision."

The US-based software firm reported a global revenue of €36.83 billion in the 2007 fiscal year, while more than 90 percent of the world's computers run Microsoft's Windows PC operating system.

The case

The case concerned two issues; the integration of the Windows media player and the interoperability between the Windows operating system and externally made programmes, as well as the compulsive licensing of Microsoft's communication server protocols.

An investigation by the commission's antitrust department concluded in March 2004 that Microsoft was squeezing out competition in the media player market and prevented other software developers from making products that work with Windows by holding back technical information.

The EU antitrust regulator told Microsoft to share some of its source code allowing rivals to make compatible software products, as well as imposing the fine.

However, Microsoft challenged the 2004 decision arguing that the commission acted unlawfully when trying to force it to share its source code.

The company said the commission is trying to make new rules that would force successful companies to share the fruits of their research with less successful rivals.

Either party can appeal the decision to the European Court of Justice – the EU's highest court – within two months and ten days.

The nearly half a billion euro fine is currently locked into a bank account collecting interest and awaiting whether either side wants to appeal the CFI ruling.

If no appeal is submitted within the deadline, then the large sum of money plus the interest will go into the EU budget with EU member states having to pay a little less into the bloc's coffers next year.

If an appeal is made, the millions of euro will stay put and await another court ruling.

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