Monday, September 24, 2007

European Competition Decision Against Microsoft Causes International Discord

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The buzz among members of the antitrust bar during the last week has concerned the European court decision holding that Microsoft Corp. abused it dominant market position, the response of U.S. antitrust enforcers to the decision, and the reaction of the European Competition Commission to the U.S. response.

The European Court of First Instance (CFI) essentially upheld the European Commission’s 2004 decision against Microsoft Corp. for abusing its dominant market position 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.

On September 17, the CFI affirmed the €497 million fine against the computer software company, as well as the order requiring Microsoft (1) to disclose interoperability information to allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers and (2) to offer a version of its Windows operating system without Windows Media Player.

U.S. Response

In response to the CFI decision, Thomas O. Barnett, Assistant Attorney General in charge of the U.S. Department of Justice Antitrust Division, expressed concern “that the standard applied to unilateral conduct by the CFI, rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition.”

Barnett went on to say that the U.S. antitrust agencies would continue to work with their European counterparts “to develop sound antitrust enforcement policies that benefit consumers on both sides of the Atlantic.

European Reaction

European Competition Commissioner Neelie Kroes called Barnett’s remarks “totally unacceptable.” Questioning the propriety of a representative of the U.S. administration criticizing a European court, she observed that “The European Commission does not pass judgment on rulings by U.S. courts, and we expect the same degree of respect.”

The American Antitrust Institute (AAI) weighed in on September 24, questioning Barnett’s statement in light of past U.S. antitrust enforcement efforts against Microsoft and the resulting court decisions.

“The oddity of Barnett’s statement is that both Europe and the U.S. found that Microsoft was a monopolist which had acted to harm competition, and both insisted on interoperability in framing a remedy,” the AAI noted in a September 24 release. "Both jurisdictions concluded that Microsoft exercised market power in personal computer operating systems, though the specifics of its antitcompetitive conduct differed . . . And in fashioning a remedy, both required interoperability to assure that independent suppliers of application software can work with the monopoly."

The decision of the Court of First Instance is Microsoft Corp. v. Commission, Case T-201/04, September 17, 2007. The September 17 press release containing Thomas O. Barnett’s response to the decision appears at the Department of Justice Antitrust Division website.

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