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Court Confirms: Microsoft Must Share

  • September 18th, 2007
  • Posted by 7thmin

microsoft.jpgThe European Commission has described this week’s (17.9.07) court decision in its favour against Microsoft as an exceptional case,which confronted “extremely harmful abuses by a company in a quasi-monopolistic position.”

TERMS OF DECISION

The Court of First Instance (CFI), the second-tier European Court, upheld a decision by the regulator to fine the American software company EU497-million (A$826-million; dcerates.com) and order it to desist from marketing practices meant to block competitors.

It also required the company to pay virtually all legal costs for the case.

The European Commission said the CFI had confirmed a ruling it made in 2004, that Microsoft had abused its dominant position in the PC operating system market, (a) by refusing to disclose interoperability information that would enable its competitors to make products which could be used with Windows PC servers, and (b) by tying Windows Media Player with its dominant Windows PC operating system.

It said bundling into the Windows operating system of software products otherwise available on a stand-alone basis had the effect of excluding competitors, thereby leading to reduced consumer choice liable to reduce access to innovative products.

COMMISSIONER SATISFIED

The European Competition Commissioner, Neelie Kroes, said the Microsoft system unchecked had been causing harm to businesses and to consumers.

“The Court has upheld a landmark Commission decision to give consumers more choice in software markets,” she said.

“That decision set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries.

“Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct, and the Commission will do its utmost to ensure that Microsoft complies swiftly.”

MICROSOFT IMPACTS

Informed observers consider the decision could have heavy impacts on Microsoft in Europe and beyond; by weakening the appeal of its operating system product, where sold without the accessory products – and where competitors’ products can be easily integrated.

It is reported to have already paid the fine pending the CFI case; and today should have relatively less to lose than at the time when its dispute with the European Union began — due to the advent of more options like the search engine Google, extensive telephony or You Tube.
A company spokesman said it would comply with its obligations under the law and would be fully studying the very long Court judgment.

An appeal to the highest court, the Court of Justice of the European Communities, is possible, if made within two months, strictly on points of law, and the an appeal process could go on for two more years.

DETAILED STATEMENT

Extract from the European Commission statement 17.9.07:

“The European Commission welcomes today’s ruling by the Court of First Instance upholding the European Commission’s 2004 decision on Microsoft’s abuse of its dominant market position and confirming the totality of the fine imposed. In this decision, Microsoft was fined €497 million for infringing the EC Treaty rules on abuse of a dominant market position (Article 82) by leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players (see IP/04/382 and MEMO/04/70). This conduct hindered innovation in the markets concerned to the detriment of consumers. To put an end to this abusive behaviour, the Commission ordered Microsoft to disclose interoperability information which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers and to offer a version of its Windows operating system without Windows Media Player. The Court’s ruling confirms that the Commission was right to prohibit Microsoft’s anti-competitive conduct which harmed competition to the detriment of consumers.

“In upholding the Commission’s decision the Court of First Instance (CFI) confirmed the Commission’s finding that Microsoft had abused its dominant position in the PC operating system market by refusing to disclose interoperability information … and by tying Windows Media Player with its dominant Windows PC operating system. The CFI confirms that both types of conduct reduced competition in the relevant markets, thereby preventing innovation and choice to the substantial detriment of consumers. The Commission’s decision established that Microsoft prevented innovative server products from being brought to the market, and that competition in the streaming media player market was distorted …

“The Commission will carefully analyse the judgment and will consider its implications for future antitrust enforcement in these sectors and in others. It is clear, however, that this is an exceptional case with extremely harmful abuses by a company in a quasi-monopolistic position on a market. The Commission decision upheld by the CFI focuses on the promotion of interoperability, which contributes strongly to innovation and competition in the software industry whilst also fully recognising the importance of intellectual property rights as incentives for innovation.”

Background:

“Work group server operating systems are operating systems running on central network computers that provide services to office workers around the world in their day-to-day work such as file and printer sharing, security and user identity management. The Commission decision ordered Microsoft to disclose to competitors interoperability information which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers – that is to say for their servers to be able to seamlessly ‘communicate’ with the ubiquitous Windows OS. Microsoft was also required to offer a version of its Windows OS without Windows Media Player. On 7 June 2004, Microsoft filed an application for annulment of this decision with the CFI. For a complete chronology of the case, see also:

http://ec.europa.eu/comm/competition/antitrust/cases/microsoft/

COURT OF FIRST INSTANCE

The Court has jurisdiction over laws made by the European Commission, Council and parliament in areas ceded to the European Union by agreement of the national governments; including as in this case laws to guarantee free commercial competition, very actively enforced.

The Court of First Instance is made up of at least one judge from each of the 27 EU Member States, usually sitting Chambers of five or three judges.

The CFI has jurisdiction to hear:

* Direct actions brought by natural or legal persons against acts of Community institutions (addressed to them or directly concerning them as individuals) or against a failure to act on the part of those institutions, for example, a case brought by a company against a Commission decision imposing a fine on that company;
* Actions brought by the Member States against the exercise of certain powers by the Commission or the European Council;
* Actions against other branches of the European Union;
* Actions relating to EU trade marks.

It can act as an appeal court where disputes between the EU and its staff are heard by the Civil Service Tribunal.

Reference:

Judgment:- Court of First Instance, Judgment of the CFI in case T-201/04, Miscrosoft / Commission: Competition; “The Court of First Instance essentially upholds the Commission decision …”; CFI No. 63/2007, Brussels, 17.9.07

European Commission, “Antitrust: Commission welcomes CFI ruling upholding Commission’s decision on Microsoft’s abuse of dominant market position”, MEMO/07/359, 17.9.07.

Picture: Google; educational-software

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