Microsoft set to learn its fate over €497m fine from European Commission
history of the European Commission
is more subtle, but potentially more
often referred to as a ‘superdominant’
as a competition regulator.
damaging. Most of us are used to tied
company. Case law and decisions by
or bundled offers like season tickets
regulators in numerous cases have
In this role, the European Commission
for a football club or pasta sauce with
established the principle that as your
is charged with making sure that
pasta – often the practice benefits
dominance increases so does your
companies that have a dominant
consumers by adding value to an
responsibility to protect a dynamic
position in the market do not abuse
offer.
competitive process.
that position by damaging the interests
taken by Masterfoods against HB, the
of consumers and through them,
Court of First Instance noted that a de
The Commission claims Microsoft
competitors and the venture capitalists
facto tie of 40% of ice cream outlets
abused its dominance in two ways.
software
that back them. The case is a test of
was an abuse of dominant position.
First, Microsoft refused to supply vital
company in the world finds out
two principles of abuse of dominant
whether it has won its appeal against
position – refusal to supply and tying.
By Helen Higgins Whelan
Tomorrow,
the
biggest
the regulator of the biggest market in
In the ‘freezer cabinet case’
interface information to competitors
But in the case of a very dominant
such as Sun Microsystems that would
company, tying may be used to
ensure that software products could
The European Court of
Refusal to supply is a well established
sinister effect. Competition regulators
communicate
First Instance will deliver its judgment
anticompetitive practice; one example
measure dominance by a company’s
Windows PC operating system.
on the appeal by Microsoft against the
of which is the Magill decision
market share: shares as low as 40%
decision of the European Commission
against RTE.
RTE had refused to
have found to be dominant. Microsoft
Second, the Commission found that
to fine it more than €497 million.
supply TV schedules to a rival
with it’s roughly 90% market share of
“tying”
This fine was the biggest in the
publication, Magill TV Guide. Tying
the PC operating system market is
(WMP) to the Windows operating
the world.
properly
Windows
with
Media
the
Player
Microsoft set to learn its fate over €497m fine from European Commission
system adversely affected competition
US Department of Justice, their
Instance were to overturn that refusal,
appeal the decision of the Court of
in the media players market.
equivalent of the Commission.
the Schneider decision means that
First Instance to the European Court
Ryanair might have a claim for
of Justice. In the longer term, there is
damages against the Commission.
danger of more radical action being
The
concern for competition authorities is
that competitors for the tied product
This decision is critical for the
(in this case WMP) will be excluded
European
from the marketplace because their
competition regulator. A number of
The CFI has been highly critical of the
can Microsoft end up in front of
customers who also need the tying
their high profile decisions have been
Commission’s
a
competition regulators before one of
product (Windows) will be re-directed
overturned by the European Courts in
number of cases including Schneider,
the regulators decide that the only
away from the alternative suppliers of
recent years.
In July, the Court of
Tetra Lavel/Sidel and GE/Honeywell,
remedy is structural and do what the
the tied product. The more users of
First Instance ruled for the first time
all of which concerned mergers and
US
the tied product that are dependent on
that a company - Schneider Electric
their potential impact on competition.
suggested – break it up.
the dominant product, the more
SA - must be compensated by the
No competition regulator (particularly
impact
have.
Commission for losses sustained as a
the main European watchdog) wants
of
result of the wrongful prohibition of
their decisions overturned and a
Schneider’s merger with Legrand.
reversal
the
Microsoft’s
Internet
tying
earlier
Explorer
essentially
will
bundling
with
excluded
Windows
their
Commission
as
taken against Microsoft. How often
a
of
assessments
the
in
decision against
Microsoft would be a huge loss in a
rival
series of losses.
Netscape’s internet navigator product
Ryanair announced on Wednesday
was essentially excluded from the
that it has lodged an appeal against the
market.
the first
Commission’s refusal to allow its bid
But what happens if Microsoft loses?
investigation against Microsoft by the
for Aer Lingus. If the Court of First
In the short term, it is likely they will
This led to
Department
of
Justice
first
Microsoft set to learn its fate over €497m fine from European Commission
benefits consumers by adding value
Commission is charged with making
to an offer. In the ‘freezer cabinet
sure that companies that have a
case’ taken by Masterfoods against
The Commission claims Microsoft
dominant position in the market do
HB, the Court of First Instance
abused its dominance in two ways.
not abuse that position by damaging
noted that a de facto tie of 40% of
First, Microsoft refused to supply
the interests of consumers and
ice cream outlets was an abuse of
vital
through them, competitors and the
dominant position.
competitors
this
role,
the
Tomorrow, the biggest software
interface
information
such
as
Sun
The case is a test of two principles
But in the case of a very dominant
software
products
of abuse of dominant position –
company, tying may be used to
communicate
properly
refusal to supply and tying.
sinister
Windows PC operating system.
company in the world finds out
to
Microsystems that would ensure that
venture capitalists that back them.
By Helen Higgins Whelan
dynamic competitive process.
European
In
effect.
Competition
could
with
the
regulators measure dominance by a
whether it has won its appeal against
Refusal
well
company’s market share: shares as
Second, the Commission found that
the regulator of the biggest market in
established anticompetitive practice;
low as 40% have found to be
“tying” Windows Media Player
the world. The European Court of
one example of which is the Magill
dominant.
(WMP) to the Windows operating
First
decision against RTE.
RTE had
roughly 90% market share of the PC
system
judgment on the appeal by Microsoft
refused to supply TV schedules to a
operating system market is often
competition in the media players
against the decision of the European
rival publication, Magill TV Guide.
referred to as a ‘superdominant’
market.
The
Commission to fine it more than
Tying is more subtle, but potentially
company. Case law and decisions
competition
authorities
€497 million.
more damaging. Most of us are used
by regulators in numerous cases
competitors for the tied product (in
the
to tied or bundled offers like season
have established the principle that as
this case WMP) will be excluded
a
tickets for a football club or pasta
your dominance increases so does
from the marketplace because their
sauce with pasta – often the practice
your responsibility to protect a
customers who also need the tying
Instance
biggest
European
in
the
will
deliver
its
This fine was the
history of
Commission
competition regulator.
as
to
supply
is
a
Microsoft with it’s
adversely
affected
concern
is
for
that
product (Windows) will be re-
first time that a company - Schneider
potential impact on competition. No
directed away from the alternative
Electric SA - must be compensated
competition regulator (particularly
suppliers of the tied product. The
by the
losses
the main European watchdog) wants
more users of the tied product that
sustained as a result of the wrongful
their decisions overturned and a
are dependent on the dominant
prohibition of Schneider’s merger
reversal of the decision against
product, the more impact the tying
with Legrand.
Microsoft would be a huge loss in a
will have.
Commission
for
series of losses.
Microsoft’s earlier
bundling of Internet Explorer with
Ryanair announced on Wednesday
Windows essentially excluded their
that it has lodged an appeal against
But what happens if Microsoft
rival Netscape’s internet navigator
the Commission’s refusal to allow
loses? In the short term, it is likely
product was essentially excluded
its bid for Aer Lingus. If the Court
they will appeal the decision of the
from the market. This led to the first
of First Instance were to overturn
Court of First Instance to the
investigation against Microsoft by
that refusal, the Schneider decision
European Court of Justice. In the
the US Department of Justice, their
means that Ryanair might have a
longer term, there is danger of more
equivalent of the Commission.
claim
radical action being taken against
for damages against the
Microsoft. How often can Microsoft
Commission.
end up in front of competition
This decision is critical for the
a
The CFI has been highly critical of
regulators
competition regulator. A number of
the Commission’s assessments in a
regulators decide that the only
their high profile decisions have
number
including
remedy is structural and do what the
been overturned by the European
Schneider, Tetra Lavel/Sidel and
US Department of Justice first
Courts in recent years. In July, the
GE/Honeywell,
suggested – break it up.
Court of First Instance ruled for the
concerned
European
Commission
as
of
cases
all
mergers
of
and
which
their
before
one
of
the