LAWFUEL – The Legal Newswire – On Monday morning 17 September 2007 (at 09.30 CET, to be precise) the European Union’s Court of First Instance will rule in one of the most controversial competition law cases of all times: the appeal by Microsoft Corporation against the European Commission’s 2004 decision which held that Microsoft had violated EU competition law by abusing a dominant position. This judgment could represent a watershed for EU competition law and policy.
What did the Commission’s decision say?
In its 300+ page decision, the Commission found that two aspects of Microsoft’s business practices amounted to abusive conduct:
Starting in 1998, by not providing a competitor with proprietary information concerning Windows software, the Commission found that Microsoft had deliberately restricted interoperability between personal computers running the Windows Client PC Operating System and server computers running non-Microsoft work group server software.
From May 1999, when Microsoft integrated a Windows Media Player functionality with “streaming” capability into the Windows Client PC Operating System, it had illegally tied sales of the Windows Media Player to sales of the Windows operating system.
The decision ordered Microsoft to implement remedies aimed at rectifying these abuses. In addition, the Commission imposed fines on Microsoft of the unprecedented amount of €497 million.
Why is the Court’s judgment important?
This could be one of the most significant EU competition law judgments of the past decade. It represents an opportunity for the Court to provide much-needed guidance to the Commission and to companies on the special competition rules that apply to dominant firms. Such guidance would be timely, especially in the context of the policy debate following the Commission’s 2005 discussion paper on this topic. Some of the questions posed by the judgment are:
How should EU competition law strike the balance between encouraging innovation through protection of the developer’s creative effort and encouraging innovation by facilitating third party exploitation of those efforts? How does EU competition law decide which of these choices serves its goal of promoting consumer welfare?
Does competition law justify competition authorities’ intervention in companies’ product development decisions?
When competition authorities and courts assess claims of exclusionary conduct, what level of proof as to the likelihood of exit is required before foreclosure is established?
Do competition rules in the USA and in the EU address the same concerns? Should they?
All who have followed the Microsoft case agree this judgment is a cliff-hanger. Possibly, the Court may choose to craft a narrow judgment specific to the facts of the case, but it may seize the opportunity to deliver a judgment dealing with some quite fundamental questions. Either way, the repercussions of the judgment are likely to be felt for quite some time after next Monday.
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