Microsoft competition appeal dismissed

Microsoft abused its dominant position and must pay €500m in fines, the European Court of First Instance has held in Microsoft Corporation v European Commission.

The ruling largely upholds the European Commission’s 2004 decision that Microsoft had infringed Art 82 of the EC Treaty by committing two abuses of its dominant position.

Marc Israel, a competition partner at Macfarlanes, says: “Defeat in the Court of First Instance would have had a huge impact on morale at the Commission but this judgment will give it renewed confidence to go after big companies that it believes have infringed competition law.”

The Commission will be particularly pleased that its economic analysis withstood detailed scrutiny by the court as that is where it has fallen down in the past, he says.

Microsoft was accused of two types of anti-competitive behaviour: refusing to provide interoperability information to competing providers of work group server operating systems; and bundling its media player with its Windows operating system. 

Israel says the case will have implications for companies whose dominance is founded in intellectual property.

“An important aspect of the court’s decision was the finding that the Commission had only ordered Microsoft to disclose to competitors the specifications of certain protocols and not details of its source code. Had the Commission required source code details to be disclosed to competitors, which could have undermined Microsoft’s intellectual property rights and incentives to innovate, the outcome of the case may have been very different,” he adds.