The european microsoft case at the crossroads of competition policy and innovation: Comment on ahlborn and evans

Antitrust Law Journal

Volumn 75, Issue 3, 2009, Pages 933-963

  Larouche, Pierre ^a,b  

^a Department of Competition Law ^*  (Netherlands)

^b TILBURG UNIVERSITY   (Netherlands)

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[No Author keywords available]

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EID: 67649199333     PISSN: 00036056     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (163)

1. Case T-201/04, Microsoft Corp. v. Comm'n, 2007 E.C.R. II-3601 (Ct. First Instance) (CFI decision 2007), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do? uri=CELEX:62004A0201:EN:HTML. This case was brought under Article 230 of the Treaty Establishing the European Community against the 2004 Commission Decision.
2. Case COMP/G3/37.792 - Microsoft Corp., Comm'n Decision, 2007 O.J. (L 32) 23 (Mar. 24, 2004) (Commission Decision 2004), available at http://www.europa. eu.int/comm/com- petition/antitrust/cases/decisions/37792/en.pdf. In addition, this article also refers to the 2004 CFI decision in which Microsoft's application for interim relief was dismissed.
3. Case T-201/04, Microsoft Corp. v. Comm'n, 2004 E.C.R. II-4463 (Ct First Instance) (CFI decision 2004).
4. The Microsoft case started with a complaint filed by Sun Microsystems on December 10, 1998; although it is not public, the Sun Complaint is mentioned by the Commission in its 2004 Decision. Commission Decision 2004 at 2 (¶ 3).
5. The Microsoft case appeared to close with the Commission Decision of February 27, 2008. Case COMP/C-3/37.792 - Microsoft Corp., Comm'n Decision (Feb. 27, 2008) (fixing the final amount of the fine), available at http://ec.europa.eu/competition/antitrust/cases/decisions/37792/decision2008. pdf. However, this 2008 Commission Decision is now pending before the Court of First Instance.
6. Case T-167/08, Microsoft Corp. v. Comm'n, 2008 O.J. (C 171) 41 (announcing the application).
7. Christian Ahlborn & David S. Evans, The Microsoft Judgment and Its Implications for Competition Policy Towards Dominant Firms in Europe, supra this issue,75 ANTITRUST L.J. 887 (2009).
8. Indeed, Microsoft chose not to appeal the CFI Judgment to the ECJ.
9. As illustrated by Tetra Laval it does not matter that the appeal appears unlikely to succeed because the ECJ can also mark its disagreement with the reasoning of the CFI without necessarily coming to a different conclusion. Case C-12/03 P, Comm'n v. Tetra Laval, 2005 E.C.R. I-987, ¶ 39 (Eur. Ct Justice), available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri= CELEX:62003J0012:EN:HTML.
10. Joined Cases 6 & 7/73, Istituto Chemioterapico Italiano S.p.A. & Commercial Sol- vents Corp. v. Comm'n, 1974 E.C.R. 223 (Eur. Ct Justice), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX: 61973J0006:EN:HTML.
11. Joined Cases C-241 & C-242/91 P, Radio Telefis Eireann & Indep. Television Publ'ns Ltd. v. Comm'n, 1995 E.C.R. I-743 (Eur. Ct Justice) (Magill), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX: 61991J0241:EN:HTML.
12. Case C-7/97, Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs, 1998 E.C.R. I-7791 (Eur. Ct. Justice), available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do? uri=CELEX:61997J0007:EN:HTML.
13. Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, 2004 E.C.R. I-5039 (Eur. Ct Justice), available at http://eur-lex.europa. eu/LexUriServ/ LexUriServ.do?uri=CELEX:62001J0418:EN:HTML.
14. In their case law, the ECJ and CFI characterize as "exceptional circumstances" the elements required to justify ordering a dominant firms to provide access to its physical or intellectual property. For the sake of simplicity in drafting, they are referred to here as "elements."
15. In Case C-418/01, IMS Health, 2004 E.C.R. I-5039, while the ECJ did specify that the elements were cumulative, it did not rule that the list was exhaustive. That case was in any event decided after the Commission decision in Microsoft.
16. Commission Decision 2004, supra note 1, ¶ 555.
17. CFI decision 2007, supra note 1, ¶ 332.
18. Id. ¶ 333 (adding the absence of objective justification);
19. id. ¶ 334 (noting that the new product element is found only in intellectual property cases);
20. id. ¶ 335 (noting the two-market construction).
21. Id. ¶¶ 859-869.
22. Commission Decision 2004, supra note 1, ¶ 794. While the Commission does not indi- cate where the four elements of its test come from, they are remarkably close to the requirements under U.S. law for tying to be illegal under Sherman Act § 1, as they were applied in the U.S. Microsoft case.
23. See United States v. Microsoft Corp., 253 F.3d 34, 84, 95 (D.C. Cir. 2001) (taking into account that the D.C. Circuit Court of Appeal added a fore- closure of competition requirement and an efficiency defense when it moved the inquiry under a rule of reason.).
24. Case T-30/89, Hilti AG v. Comm'n, 1991 E.C.R. II-1439 (Ct. First Instance), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:61989A0030:EN: HTML,
25. aff'd Case G53/92 P, Hilti AG v. Comm'n, 1994 E.C.R. I-667 (Eur. Ct. Justice), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:61992J00 53:EN:HTML.
26. Case T-83/91, Tetra Pak Int'l SA v. Comm'n, 1994 E.C.R. II-755 (Ct. First Instance), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX: 61991A0083:EN:HTML,
27. aff'd, Case C-333/94 P, Tetra Pak Int'l SA v. Comm'n, 1996 E.C.R. I-5951 (Eur. Ct Justice), available at http://eur-lex.europa.eu/LexUriServ/LexUri Serv.do?uri=CELEX:61994J0333:EN:HTML.
28. CFI decision 2007, supra note 1, ¶¶ 852-869.
29. As formulated authoritatively by the ECJ. See Case C-12/03 P, Comm'n v. Tetra Laval, 2005 E.C.R. I-987, ¶ 39 (Eur. Ct Justice).
30. CFI decision 2007, supra note 1, ¶ 89.
31. Id. ¶¶ 87-88;
32. Ahlborn & Evans, supra note 3, at 924-926
33. And even then this may be only to make the point, as was the case with GE/Honeywell. The award of damages against the Community in the recent Schneider case, however, changes the incentives and could lead to more systematic challenges to MCR decisions. Case T-351/03, Schneider Electric v. Comm'n, 2007 E.C.R. II-2237 (Ct First Instance), available at http://eurlex.europa.eu/ LexUriServ/LexUriServ.do?uri=CELEX: 62003A0351:EN:HTML.
34. Positive (clearance) decisions have in a number of cases been challenged by disgrun- tled competitors of the merged entity, with limited success. See Case T-114/02, BaByliss SA v. Comm'n, 2003 E.C.R. II-1279 (Ct. First Instance), available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri=CELEX: 62002A0114:EN:HTML;
35. Case T-464/04, IMPALA v. Comm'n, 2006 E.C.R. II-2289 (Ct First Instance), available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri=CELEX: 62004A0464:EN:HTML. Such positive decisions are left out of the data set because they do not correspond to the concern for Type 1 errors that underpins the discussion of deference. If they were included, in any event, the reversal percentage for MCR decisions would only decrease.
36. As of January 2008, as compiled by the author. The total number of negative decisions under Article 82 EC is based on published cases. Nowadays cases tend to be system- atically published, but in the early days of EC competition law some cases went unpublished. The actual number of negative Article 82 EC decisions issued by the Com- mission is, therefore, probably higher if one includes earlier unpublished cases, so that the proportion of cases reversed by the Court would, in fact, be somewhat lower: none of the unpublished Commission decisions were brought before the ECJ or CFI (otherwise they would have been included in the data set by virtue of the ECJ/CFI judgment).
37. This total counts the CFI's GE/Honeywelljudgment as a reversal in substance, if not in result. Case T-210/01, Gen. Elec. v. Comm'n, 2005 E.C.R. II-5575 (Ct First Instance), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=CELEX:62001A02 10:EN:HTML.
38. From a lawyer's perspective, the conflation of the outcome (confirm or quash) with the process (deferential or not) reflects a typical failure of social science research to take judicial processes seriously, focusing instead on outcomes and extraneous factors.
39. Commission Decision 2007, supra note 1, ¶ 850.
40. Id. ¶ 773.
41. CFI decision 2004, supra note 1 (CFI order on an application by Microsoft for the suspension of the execution of the March 2004 Commission Decision).
42. Id. ¶ 71 (referring to the Rules of Procedure of the Court and to case law).
43. Id. ¶¶ 204-225. These prima facie valid arguments related among others to whether the Decision fit the test outhned in previous case law and whether the presence of intellec- tual property rights made any difference in the outcome, two issues which of course fea- ture prominendy in the CFI Judgment.
44. Id. ¶¶ 394-404. These prima facie valid arguments related among others to the test used by the Commission to find an abusive tying, to the significance of the integrated Windows design in the legal assessment and to the existence of separate markets for Win- dows OS and Media Player, here as well issues which feature prominendy in the CFI Judgment.
45. Apparendy, the Grand Chamber was split 7-6. Stephanie Bodoni & Matthew Newman, Microsoft Settled EU Case Not Knowing Vote Was 7 to 6, BLOOMBERG, Sept 5, 2008.
46. Case C-418/01, IMS HEALTH GMBH & Co. OHG v. NDC HEALTH GMBH SC CO. KG, 2004 E.C.R. I-5039, ¶ 37 (Eur. Ct Justice).
47. Case G164/98 P, DIR Int'l Film v. Comm'n, 2000 E.C.R. I-447, ¶¶ 38-49 (Eur. Ct. Justice), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=CELEX: 61998J0164:EN:HTML.
48. It is open to argument whether the Commission might not have been wiser to rely on the "classical" refusal to supply case law, as exemplified by Commercial Solvents, instead of the more recent "essential facilities" line of cases. Joined Cases 6 & 7/73, Istituto Chemi- oterapico Italiano S.p.A. & Commercial Solvents Corporation v. Comm'n, 1974 E.C.R. 223 (Eur. Ct. Justice).
49. For a comparison between the two, see PIERRE LAROUCHE, COMPETI- TION LAW AND REGULATION IN EUROPEAN TELECOMMUNICATIONS 203-11 (2000).
50. Commercial Solvents involved the disruption of earlier levels of supply and set a much lower threshold for abuse than the "essential facilities" cases where dominant firms were forced to open up access where it had never been granted before. Two reasons might explain why the Commission took the legal position it did in Microsoft, (i) the prevalence within the Commission staff of the unified theory of refusal to supply and essential facilities, according to which the whole case law is part of a coherent whole (as put forward by John Temple Lang, Defining Legitimate Competition: Companies ' Duties to Supply Competitors and Access to Essential Facilities, 18 FORDHAM INT'L L.J. 437 (1994));
51. and (ii) the worry that Commercial Solvents, an older case which smacks of protecting competitors rather than competition, would not survive under contemporary standards for competition law. See also Damien Geradin, Limiting the Scope of Article 82 EC: What Can the EU Learn from the U.S. Supreme Court's Judgment in Trinko in the Wake of Microsoft, IMS and Deutsche Telekom?, 41 COMMON MKT. L. REV. 1519, 1535-36 (2004).
52. For a discussion of how the Commission Decision diverges from the IMS test, see Ro- berto Pardolesi & Andrea Renda, The European Commission's Case Against Microsoft: Kill Bill?, 27 WORLD COMPETITION 513, 549-51 (2004);
53. James Killick, IMS and Microsoft Judged in the Cold Light of IMS, 1 COMPETITION L. REV. 24 (2004).
54. CFI decision 2007, supra note 1, ¶¶ 207-245;
55. see also, id. ¶¶ 246-266 (discussing whether the remedy actually matches the substantive analysis of the Commission).
56. Council Directive 91/250, On the Legal Protection of Computer Programs, art. 6, 1991 O.J. (L 122) 42.
57. CFI decision 2007, supra note 1, ¶¶ 222-227.
58. Which could be administered through either public procurement mechanisms (for public sector institutions) or private mechanisms, such as bids made on the basis of RFPs.
59. Commission Decision 2004, supra note 1, ¶ 182.
60. CFI decision 2007, supra note 1, ¶ 228.
61. On this point, see the discussion in Pardolesi & Renda, supra note 38, at 524-525 Note furthermore that the two are not exclusive of one another: breakthrough innovation can also occur in a market which is otherwise characterized by incremental innovation.
62. Under the "indispensability" heading of the Judgment. CFI decision 2007, supra note 1, ¶¶ 371-422.
63. The CFI does not use the term "super-dominance," referring instead to the "ex- traordinary" nature of Microsoft's dominance or its very high market share. CFI decision 2007, supra note 1, ¶¶ 387, 940, and 1038.
64. Id. ¶¶ 421-422.
65. Contrary to what Ahlborn and Evans claim, the requirements of indispensability and elimination of competition are not one and the same, even if the difference between the two is slight. Ahlborn & Evans, supra note 3, at 900-01 (indispensability refers to whether the facility/information can be duplicated or otherwise replaced, where the threshold for what is economically feasible is set quite high).
66. See Case C-7/97, Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs, 1998 E.C.R. I-7791 (Eur. Ct Justice); the "elimination of competition" element is more economic and involves relevant market definition.
67. See LAROUCHE, supra note 37, at 188-196
68. For a criticism of market definition, see Pardolesi & Renda, supra note 38, at 543-547
69. CFI decision 2007, supra note 1, ¶ 559. Leveraging claims being complicated and con- troversial in economic theory, one would have expected the CFI to spend more time on this point.
70. Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, 2004 E.C.R. I-5039 (Eur. Ct Justice).
71. Joined Cases G241 & G242/91 P, Radio Telefis Eireann & Indep. Television Publ'ns Ltd. v. Comm'n, 1995 E.C.R. I-743 (Eur. Ct. Justice) (Magill).
72. Commission Decision 2004, supra note 1, ¶¶ 578-584.
73. Id. ¶¶ 693-700.
74. See Treaty Establishing the European Community (consolidated text), Dec. 29, 2006, 2006 O.J. (C 321E) 37 & 75, available at http://eur-lex.europa.eu/ LexUriServ/LexUri Serv.do?uri=OJ:C:2006:321E:0001:0331:EN:pdf.
75. CFI decision 2007, supra note 1, ¶ 647.
76. As the CFI itself recalls later in its Judgment when dealing with the tying issue. Id. ¶¶ 859-861.
77. Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, 2004 E.C.R. I-5039, ¶ 49.
78. It is interesting to note that the reasoning of the CFI is replete with references to the manner in which other providers competed with Microsoft over previous versions on Win- dows, underlining how the case is easier to frame as a termination of existing supply relationships, as discussed above.
79. See Derek Ridyard, Compulsory Access under EC Competition Law - A New Doctrine of "Con- venient Facilities" and the Case for Price Regulation, 11 EUR. COMPETITION L. REV. 669 (2004).
80. See the interesting discussion in Ahlborn at al. on this point. Christian Ahlborn et al., The Logic and Limits of the "Exceptional Circumstances" in Magill and IMS Health, 28 FORDHAM INT'L L.J. 1109 (2005). Their conclusion is entirely apposite: a new product "satisfies potential demand by meeting the needs of consumers in ways that existing products do not."
81. Id. at 1147. Not even in Magill was it the case: after all, the Magill TV guide con- tained the exact same schedules (the essential information) as the others, its main novelty consisting in bringing all these schedules in one single guide.
82. Joined Cases G241 & C- 242/91 P, Radio Telefis Eireann & Indep. Television Publ'ns Ltd. v. Comm'n, 1995 E.C.R. I-743 (Eur. Ct Justice) (Magill).
83. See also François Lévêque, Innovation, Leveraging and Essential Facilities: Interoperability Licensing in the EU Microsoft Case, 28 WORLD COMPETITION 71, 75-78 (2005).
84. On the availability of the defense and the burden of proof, the CFI follows the posi- tion set out DG Competition. See European Comm'n, DG Competition, Discussion Paper on the Application of Article 82 of the Treaty to Exclusionary Abuses: Public Consultation, ¶¶ 77-92 (Dec. 19, 2005), available at http://ec.europa.eu/comm/competition/antitrust/art82/ discpaper2005.pdf. On that issue, the Discussion Paper builds on existing case law.
85. As pictured by the Judgment, to the extent that Microsoft would invoke the mere existence of intellectual property rights over the interoperability information as an objec- tive justification in and of itself, the argument would be circular. CFI decision 2007, supra note 1, ¶¶ 689-695. However, Microsoft's argument went further and considered also the ex ante effect of forced disclosure on its incentives to innovate in general.
86. Id. ¶ 698.
87. Id. ¶¶ 700, 702.
88. See generally Ekaterina Rousseva, The Concept of "Objective Justification" of an Abuse of a Dominant Position: Can It Help to Modernise the Analysis under Article 82 EC?, COMPETITION L. REV. NO. 2, March 2006, available at http://www.clasf.org/CompLRev/Issues/ Vol2Issue2Art2Rousseva.pdf.
89. Compare for instance with the efficiencies arising from certain types of vertical re- straints in terms of avoiding free riding and overcoming information asymmetries.
90. The whole argument centers on incentives to innovate, so that even at the theoretical level (leaving aside the quantification problem), there might never be any efficiency gain, given that innovation is unpredictable. It is all about trying to influence the course of future events in a manner which is thought favorable. In the DG Competition Discussion Paper, the Commission classifies this argument as a defense, without really addressing the issue raised here. European Comm'n, DG Competition, Discussion Paper, supra note 64, ¶¶ 234-236.
91. See id. ¶¶ 77-92.
92. Commission Decision 2004, supra note 1, ¶ 783.
93. In principle, this argument appears to run against the interest of Microsoft, given that a balancing test would likely do better justice to its arguments on innovation incen- tives. However, in the context of the review of an existing Commission decision, any legal argument which would lead to the invalidity of the decision was presumably thought to be worth making.
94. CFI decision 2007, supra note 1, ¶¶ 705-710.
95. Id. ¶ 709.
96. On this point, see Antonios Bouchagiar, Softwars: the Role of the Essential Facilities Doctrine as Jus in Bello, 8 COMPETITION & REG. IN NETWORK INDUSTRIES 337 (2007), available at http://www.mayerbrown.com/ publications/article.asp?id=3787&nid=6.
97. Geradin, supra note 37, at 1539-1543
98. These paragraphs build on LAROUCHE, supra note 37, at 196-203.
99. This includes the cost of making a decision (i.e., determining whether access should be granted, where or over which information, and at what cost) and enforcing it. The cost of continuing to enforce the decision in subsequent periods (litigation, reporting, etc.) is ignored for the sake of simplicity.
100. It is assumed for the sake of simplicity that TC is not changed from period 1, since there is no new intervention. Innovation could of course also consist in decreasing costs rather than increasing valuation.
101. The effect of the intervention of the authority can be felt not only on the relevant market, but also on other markets.
102. By giving rise to an expectation that rents on future innovation will also be confiscated via compulsory access or disclosure orders.
103. By giving a greater incentive to innovate in the knowledge that access to information or facilities in the hands of dominant players will be enforced. At the same time, small entrants must also fear that, if successful, their own innovation rents could be confiscated in turn.
104. See Simonetta Vezzoso, The Incentives Balance Test in the EU Microsoft Case: a Pro-inno- vation "Economics-Based" Approach, 27 EUR. COMPETITION L. REV. 382, 386 (2006) (re- marking that the social welfare calculus is controversial and its feasibility has been "seriously questioned").
105. The entrant expands the market and increases the innovation rent, albeit not at the same rate as if the incumbent itself would have supplied the new product. At the same time, the entrant can also undermine the incumbent's incentives by engaging in vertical differentiation with a new product of a lower quality.
106. 2 under certain circumstances).
107. Commission Decision 2004, supra note 1, ¶¶ 578-584.
108. See CFI decision 2007, supra note 1, ¶ 702 (discussing how Microsoft's previous disclo- sure of information allowed operators to make products more attractive and noting that there was no claim that this had any negative impact).
109. See generally Jochen Appeldoorn, He Who Spareth His Rod, Hateth His Son? Microsoft, Superdominance and Article 82 EC, 26 EUR. COMPETITION L. REV. 653 (2005) (critiquing the current view on the relevance of super-dominance).
110. See generally Maurits Dolmans & Thomas Graf, Analysis of Tying Under Article 82 EC: The European Commission's Microsoft Decision in Perspective, 27 WORLD COMPETITION 225 (2004) (explaining the tying portion of the Commission's decision in Microsoft);
111. David S. Evans & Jorge Padilla, Tying Under Article 82 EC and the Microsoft Decision: A Comment on Dolmans and Graf, 27 WORLD COMPETITION 503 (2004) (examining approaches toward tying prac- tices and the permissible limits of product design by dominant firms);
112. Derek Ridyard, Tying and Bundling - Cause for Complaint?, 26 EUR. COMPETITION L. REV. 316 (2005).
113. See abo Jean-Yves Art & Gregory S. McCurdy, The European Commission's Media Player Remedy in its Microsoft Decision: Compubory Code Removal Despite the Absence of Tying or Foreclosure, 25 EUR. COMPETITION L. REV. 694 (2004).
114. See supra notes 16-19 and accompanying text.
115. GFI Decision 2007, supra note 1, ¶ 869
116. (referring to Commission Decision 2004, supra note 1, ¶ 794). It was common ground that the second condition (dominance on the market for the tying product) was met, so it was not discussed in the Judgment
117. CFI decision 2007, supra note 1, ¶ 870.
118. Microsoft insisted, in particular, on the absence of notable separate demand for Win- dows OS without WMP, whereas the Commission and the CFI put more emphasis on the existence of separate demand for streaming media players. See id. ¶¶ 925-933. Microsoft's line of argument, while attractive, seems to collapse the separate demand issue with the remedy. It draws strength from the uselessness of the remedy ordered in Microsoft. Leav- ing the remedy aside, however, the issue is whether there is separate demand for each product (i.e., without tying), which could take the form of demand for a package where Windows and WMP are sold together but can be untied as required. As the CFI rightly remarks, Microsoft's argument could imply that complementary products cannot be separate products.
119. See id. ¶ 921.
120. Ahlborn & Evans, supra note 3, at 921-922
121. CFI decision 2007, supra note 1, ¶ 864.
122. WMP is given away free, at least when downloaded from the Internet Of course, the development costs of WMP are covered by other Microsoft revenue streams.
123. United States v. Microsoft Corp., 231 F. Supp. 2d 144 (D.D.C. 2002).
124. United States v. Microsoft Corp., 2006 WL 2882808 (D.D.C. 2006), at *4 (under III.H). This feature was added via Windows XP Service Pack 1 and is found directly in the Start Menu.
125. CFI decision 2007, supra note 1, ¶ 974.
126. Commission Decision 2004, supra note 1, ¶¶ 851-852.
127. CFI decision 2007, supra note 1, ¶¶ 1038-1058.
128. Commission Decision 2004, supra note 1, ¶ 5 (referring to the second Statement of Objections, issued on Aug. 30, 2001).
129. See Kevin J. O'Brien, As Europe Debated, Microsoft Took Market Share, N.Y. TIMES, Sept. 17, 2007, http://www.nytimes.com/2007/09/17/technology/17soft. html?-r=1&sq=Kevin %20J.%20O'brien%20September%2017,%202007&st= cse&adxnnl=1&scp=2&adxnnlx= 1230661028-ZtyaDlozcPB8OSF1mmKkdg (describing market share) (online version of print article on page C3 tided European Verdict on Appeal by Microsoft Expected Today) ;
130. see also Commission Decision 2004, supra note 1, ¶¶ 905-915.
131. The tying of WMP to Windows OS does not prevent other media players from being used, it just makes WMP more ubiquitous, as the CFI notes in the Judgment. CFI decision 2007, supra note 1, ¶ 1049.
132. Id ¶ 260.
133. Id. ¶¶ 867-868, 1031-1035.
134. Of course, as a general proposition, Microsoft - like any other defendant in an Arti- cle 82 EC case - is served by an autonomous foreclosure requirement, but as noted above, this argument is brought forward in a litigation context. See supra note 73 and accompany- ing text.
135. On this point, the Ahlborn and Evans criticism of the CFI is unduly harsh. See Ahl- born & Evans, supra note 3, at 908-09. The CFI does take a step in the right direction, and provided that one agrees with the Commission's focus on the OEM distribution channel (which neither Ahlborn and Evans nor this author do), the part of the Commission case which the CFI considers sufficient does indeed support a finding of foreclosure.
136. However, experience shows that competition and regulatory authorities, once they have invested in an investigation, will not readily conclude that the actions of another authority have already addressed the issues which arise from the investigation. See Pierre Larouche, Legal Issues Concerning Remedies in Network Industries, in REMEDIES IN NETWORK INDUSTRIES: EC COMPETITION LAW vs. SECTOR-SPECIFIC REGULATION 21, 39-41 (Damien Geradin ed., 2004).
137. The IT industry has always been very critical of Microsoft's single-handed decisions as to which features or applications would be integrated into Windows because these deci- sions often terminated or shrunk entire lines of business. Of course, this can be an effi- cient outcome, but the issue remains whether Microsoft is best qualified to make that decision.
138. That concern is also present in the first part of the case dealing with interoperability information, but in a more subdued fashion. See CFI decision 2007, supra note 1, ¶ 392.
139. The reasoning of the Commission assumes that the dissemination of content will take place along the lines of a broadcasting model, where a small number of large con- tent providers and software developers decide for the larger group of passive users. In such a situation, it might indeed pay off to stick to proprietary standards for encoding. However, so far content dissemination on the Internet is also largely done via non-broad- casting models, in particular via decentralized peer-to-peer. In such a case, a proprietary approach to encoding might be unsuccessful, given the large number of smaller content providers.
140. Commission Decision 2004, supra note 1, ¶¶ 879-897.
141. CFI decision 2007, supra note 1, ¶¶ 1060-1077.
142. Commission Decision 2004, supra note 1, ¶ 969.
143. CFI decision 2007, supra note 1, ¶¶ 1152-1153.
144. In my view, in contrast to Ahlborn and Evans, the sanctification of the IMS test is a greater concern than any loosening of the elements of that test (the "exceptional circumstances").
145. Commissioner Monti was hoping for "a strong precedent" to "establish clear princi- ples for the future conduct of a company with such a strong dominant position in the market." See, e.g., Press Release, European Comm'n, Commissioner Monti's Statement on Microsoft (Mar. 18, 2004), available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/04/ 365&format=HTML&aged=0&language=EN&guiLanguage=en.
146. Ahlborn & Evans, supra note 3, at 931-932
147. In merger control cases, the Commission lost the infamous "2002 trilogy" of Airtours, Schneider, and Tetra Laval Case T-342/99, Airtours v. Comm'n 2002 E.C.R. II-2585 (Ct. First Instance);
148. Case T-310/01, Schneider Elec. v. Comm'n, 2002 E.C.R. II-4071 (Ct First Instance);
149. Case T-5/02, Tetra Laval v. Comm'n 2002 E.C.R. II-4381,
150. aff'd, Case G12/03 P, Comm'n v. Tetra Laval, 2005 E.C.R. I-987 (Eur. Ct Justice).
151. For all intents and purposes, it also lost in General Electric. Case T-210/01, Gen. Elec. v. Comm'n, 2005 E.C.R. II-5575 (Ct. First Instance).
152. Press Release, European Comm'n, Commission Confirms Sending of Statement of Objections to Intel (July 27, 2007) (commenting on suspicions of abusive conduct by Intel designed to exclude its rival AMD from the market), available at http://europa.eu/rapid/ pressReleasesAction.do?reference=MEMO/07/314.
153. Press Release, European Comm'n, Commission Confirms Sending a Statement of Objections to Rambus (Aug. 23, 2007) (stating that Rambus is suspected of "patent am- bush" in the Dynamic Random Access Memory (DRAM) market), available at http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/07/ 330&format=HTML& aged=1&language=EN&guiLanguage=en.
154. Press Release, European Comm'n, European Commission Confirms Sending a State- ment of Objections Against Alleged Territorial Restrictions in On-line Music Sales to Ma- jor Record Companies and Apple (Apr. 3, 2007), available at http://europa.eu/rapid/ pressReleasesAction.do?reference=MEMO/07/126&format= HTML&aged=0&language= EN&guiLanguage=en. This case concerns the restrictions imposed on iTunes users (via credit card controls) preventing them from making purchases in stores outside the Mem- ber State where their credit card was issued. This practice leads to differentials in price and choice between Member States. Contrary to the other cases mentioned here, this case is based on Article 81 EC, relying as it does on the distribution agreements between Apple and major record companies. The case was settled when Apple agreed to equalize iTunes prices.
155. See Press Release, European Comm'n, European Commission Welcomes Apple's Announcement to Equalise Prices for Music Downloads from iTunes in Europe (Jan. 9, 2008), available at http://europa.eu/rapid/pressReleasesAction.do?reference= IP/08/22. Apple has also been involved in competition litigation at the Member State level concern- ing the restrictions on playing iTunes tracks on MP3 players other than the iPod (France and the Netherlands, complaint rejected) and the exclusive distribution agreements for the iPhone (Germany, interim measures against Apple refused on appeal).
156. Press Release, European Comm'n, Commission Initiates Formal Proceedings Against Qualcomm (Oct. 1, 2007) available at http://europa.eu/rapid/ pressReleasesAction.do?reference=MEMO/07/389&format=HTML&aged= 0&language=EN&gui Language=en. Qualcomm allegedly breached Article 82 EC when licensing its intellectual property on exploitative terms.
157. Press Release, European Comm'n, Commission Initiates Formal Investigations Against Microsoft in Two Cases of Suspected Abuse of Dominant Market Position (Jan. 14, 2008), available at http://europa.eu/rapid/ pressReleasesAction.do?reference= MEMO/08/19. The cases revisit the two issues in Microsoft, albeit in new markets: namely, the release of interoperability information regarding Microsoft Office and the tying of Internet Explorer to Windows so as to defeat open standards. The two new cases have allegedly caused Microsoft to espouse a different approach and issue its Interoperability Principles.
158. See Microsoft Corp., Interoperability Principles: Open Connections, Standards Support, Data Portability (Feb. 21, 2008), http://www.microsoftcom/ interop/princi- ples/defaultmspx.
159. The CFI did quash the Commission Decision as far as the use of the monitoring trustee was concerned. See CFI decision 2007, supra note 1, ¶¶ 1261-1279 (implying that more Commission resources will need to be dedicated to the implementation of decisions than was the case in Microsoft).
160. The latter assertion is not entirely fair because the U.S. Department of Justice did succeed, at least in part, in its case against Microsoft. See generally id.
161. See European Comm'n, DG Competition, Discussion Paper, supra note 64.
162. Ahlborn & Evans, supra note 3, at 909-917
163. The notion of special responsibility is only mentioned once in the reasoning of the CFI, in a quite inconsequential manner. CFI decision 2007, supra note 1, ¶ 229.