EU Ct. of 1st Instance: Microsoft Abused its Dominant Position

[Erik Mesoy]

http://www.groklaw.net/article.php?story=20070917053717322

The European Court of First Instance has upheld the commission's decision [PDF] finding that Microsoft abused its dominant position. It did this by refusal to supply and authorize the use of interoperability information and tying of the Windows client PC operating system and Windows Media Player. The EU Commission's reaction is here, including this statement from Neelie Kroes:

"The Court has upheld a landmark Commission decision to give consumers more choice in software markets. That decision set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries. The Court ruling shows that the Commission was right to take its decision. Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct. The Commission will do its utmost to ensure that Microsoft complies swiftly."

A joint statement from FSF Europe and Samba here. "A triumph for freedom of choice and competition".

Thomas Vinje, Legal Counsel for ECIS, the European Committee for Interoperable Systems, gave this reaction: "This is a great day for European businesses and consumers. At long last, this decision opens the prospect for dynamic competition in the software industry. No more user lock-in, no more monopoly pricing."

Four-page (and one boilerplate page) PDF with a summary of the judgement. A bit quoted here:

The Court considers that the Commission was correct to conclude that the work group server
operating systems of Microsoft’s competitors must be able to interoperate with Windows domain
architecture on an equal footing with Windows operating systems if they are to be capable of
being marketed viably.
The absence of such interoperability has the effect of reinforcing Microsoft’s competitive
position on the market and creates a risk that competition will be eliminated.
The Court observes that the circumstance relating to the appearance of a new product must be
assessed under Article 82(b) of the Treaty. It considers that the Commission’s finding that
Microsoft’s refusal limits technical development to the prejudice of consumers within the
meaning of that provision is not manifestly incorrect.
Last, the Court rejects Microsoft’s arguments to the effect that the refusal is objectively justified
because the technology concerned is covered by intellectual property rights. The Court notes
that such justification would render ineffective the principles established in the case-law which
are referred to above. The Court further considers that Microsoft has failed to show that if it were
required to disclose the interoperability information that would have a significant negative effect
on its incentives to innovate.

Lots more detail, and I'm going to quote a few bits from there too:

Article 82 EC deals with the conduct of one or more economic operators involving the abuse of a position of economic strength which enables the operator concerned to hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers (Joined Cases C‑359/96 P and C‑396/96 P Compagnie maritime belge transports and Others v Commission [2000] ECR I‑1365, paragraph 34). Furthermore, whilst the finding of a dominant position does not in itself imply any criticism of the undertaking concerned, that undertaking has a special responsibility, irrespective of the causes of that position, not to allow its conduct to impair genuine undistorted competition on the common market (Case 322/81 Michelin v Commission [1983] ECR 3461, paragraph 57, and Case T‑228/97 Irish Sugar v Commission [1999] ECR II‑2969, paragraph 112). Should it be established in the present case that the existing degree of interoperability does not enable developers of non-Microsoft work group server operating systems to remain viably on the market for those operating systems, it follows that the maintenance of effective competition on that market is being hindered.

 

[-0blivion-]

$690 million fine, ouch.

 

[Masquerouge]

Now what possible legal recourse will Microsoft exhaust next? :b

 

[Asher]

The real question is, when will the EU attack Apple? Everything MS has done, Apple seems to have done it many times worse.

 

[Shadylookin]

The real question is, when will the EU attack Apple? Everything MS has done, Apple seems to have done it many times worse.

to abuse a "dominant position" wouldn't you have to be dominant?

 

[Bill3000]

The real question is, when will the EU attack Apple? Everything MS has done, Apple seems to have done it many times worse.

Banned from 'poly again?

 

[QuoVadisNation]

Clearly, this court ruling was a sham. European courts simply want to get even more money from our hard-working, decent, American mom and pop corporations. Clearly.

yeah; Unless Microsoft finds an awesome technicality like the mistrial in the states; I think they're going to have to pay.

 

[JollyRoger]

The real question is, when will the EU attack Apple? Everything MS has done, Apple seems to have done it many times worse.

The next dominator in the sights of European antitrust authorities? Apple’s iTunes. Beginning Wednesday, the EC will hold antitrust hearings into the music-pricing structure for Apple’s online store. In April, the commission accused Apple and four major record companies of unfair practices. The accusation centered around European consumers being charged differing amounts for iTunes songs depending on the country in which they buy them, in violation of EU antitrust laws. If the regulator finds evidence of an antitrust violation, it can fine the companies up to 10% of their annual global revenue

http://blogs.wsj.com/law/2007/09/17/after-big-win-in-microsoft-case-eu-sets-sights-on-itunes/

 

[Tank_Guy#3]

$690 million fine, ouch.

Pennies to Microsoft.

 

[ori]

Now what possible legal recourse will Microsoft exhaust next? :b

Actually they still can appeal the ruling - though the court of Justice will only rule whether the court of first instance interpreted the laws correctly and not whether the facts determined by the court of first instance are wrong.
In effect this means that in this case this would probably only lead to a further delay of the ruling. This might be in MS's interest though since the ruling quite apart from the hefty fine also includes quite far reaching clauses on what parts of the OS have to be disclosed and how much MS can charge each competitor for this disclosure...

 

[Asher]

to abuse a "dominant position" wouldn't you have to be dominant?

Very astute observation, grasshoppah.

 

[Asher]

Pennies to Microsoft.

Yes, they recently paid almost twice that to extend warranties on the 360.

 

[amadeus]

Why don't they have Airbus design an operating system?

We all know what this is really about; it's about trying to punish Microsoft in order to try and create a market for some European developer to make operating systems. If Microsoft was based in Bruges instead of Redmond, they'd be getting showered with praise.

 

[GinandTonic]

Why don't they have Airbus design an operating system?

We all know what this is really about; it's about trying to punish Microsoft in order to try and create a market for some European developer to make operating systems. If Microsoft was based in Bruges instead of Redmond, they'd be getting showered with praise.

Oh please. BA deserved it's antitrust fine in the US, Microsoft deserves it's antitrust fine in Europe.

Put the partisan bag down slowly and kick it away from you.

 

[Bill3000]

We all know what this is really about; it's about trying to punish Microsoft in order to try and create a market for some European developer to make operating systems. If Microsoft was based in Bruges instead of Redmond, they'd be getting showered with praise.

Heaven forbid that the market have competition.

 

[amadeus]

Heaven forbid that the market have competition.

Then let someone develop a better program instead of having the EU mafia try and bust their kneecaps.

 

[mdwh]

We all know what this is really about; it's about trying to punish Microsoft in order to try and create a market for some European developer to make operating systems. If Microsoft was based in Bruges instead of Redmond, they'd be getting showered with praise.

You forget that the US found Microsoft's behaviour to be illegal also - they just haven't had the balls to do anything.

I'm just waiting for this thread to degenerate into a flawed capitalism vs socialism strawman debate, but please - a monopoly (and these sorts of monopolistic practices) are _not_ a good model for capitalism.

 

[GinandTonic]

You forget that the US found Microsoft's behaviour to be illegal also - they just haven't had the balls to do anything.

I'm just waiting for this thread to degenerate into a flawed capitalism vs socialism strawman debate, but please - a monopoly (and these sorts of monopolistic practices) are _not_ a good model for capitalism.

Couldn't agree more, except to point out -

A monopoly is a fine model for capitalism, it just isn't a free market any more.

Despite their interchangable usage they are not the same thing. The free market is the good stuff.

 

[mdwh]

Personally I'm more bothered about Microsoft's practices which made it much harder for alternative operating systems such as BeOS to get sold on PCs ( http://lists.essential.org/info-policy-notes/msg00005.html ).

Sadly the damage is done - those operating systems are gone, and no amount of fine can change the monopolistic situation we now have.

 

[LightFang]

Oh no, no more alternative operating systems. It's the end of the world. There must have been a reason why they sold out - maybe because they sucked.