The microsoft judgment and its implications for competition policy towards dominant firms in Europe

Antitrust Law Journal

Volumn 75, Issue 3, 2009, Pages 887-932

  Ahlborn, Christian ^a   Evans, David S ^b,c,d  

^a Microsoft ^*

^b MICROSOFT   (United States)

^c UNIVERSITY COLLEGE LONDON   (United Kingdom)

^d UNIVERSITY OF CHICAGO   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 67649236638     PISSN: 00036056     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (247)

1. A "client" refers to a computer that an individual uses while a "server" refers to a computer that is used by many people as part of a network.
2. Case COMP/C-3/37.792 - 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/- competition/antitrust/cases/decisions/37792/en. pdf,
3. aff'd, 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. In the text, Commission Decision 2004 is also referred to as the Microsoft Decision, Microsoft Commission Decision, the Commission Decision, and the Decision.
4. Commission Decision 2004, supra note 2, ¶¶ 786, 791. Note: ail Commission Decision 2004 citations in this article are to the full text version.
5. Commission Decision 2004, supra note 2, Id. ¶¶ 546-791.
6. The CFI annulled a part of the Microsoft Commission Decision that concerned the ap- pointment of a trustee to administer the protocol licensing program. CFI Decision 2007, supra note 2.
7. Press Release, Microsoft Corp., Microsoft Statement on Compliance with European Commission 2004 Decision (Oct. 22, 2007), available at http://www.microsoft.com/Press pass/press/2007/oct07/10-22MSStatementmspx.
8. In British Airways plc v. Commission, British Airways was found dominant in the context of Article 82 with a share which had declined from 46.3 percent to just under 40 percent during the period of abuse. Case T-219/99, British Airways pic v. Comm'n, 2003 E.C.R. II- 5917, ¶¶ 211, 225 (Ct. First Instance), available at http://eur-lex.europa.eu/LexUriServ/- LexUriServ.do?uri=CELEX:61999A0219:EN:HTML. The finding relied heavily, though, on the fact that die rest of the market was very fragmented.
9. The European Court of Justice (ECJ) and the Court of First Instance (CFI) are to- gether referred to as the "European Community Courts" or "Community Courts." Com- munity refers to the European Community, which was the predecessor to the European Union.
10. See Treaty Establishing the European Community (consolidated text), art. 82, Dec. 29, 2006, 2006 O.J. (C 321E) 37, available at http://eur-lex.europa.eu/ LexUriServ/Lex UriServ.do?uri=OJ:C:2006:321E:0001:0331.EN:pdf. Article 82 concerns abuse of domi- nant position. This provision will be referred to as Article 82 EC or Article 82 in this article.
11. Id. art. 81. Article 81 concerns anticompetitive agreements and concerted practices. In the following, this provision will be referred to as Article 81 EC or Article 81.
12. European Comm'n, DG Competition, Discussion Paper on the Application of Article 82 of the Treaty to Exclusionary Abuses: Public Consultation (Dec. 19, 2005), available at http://- ec.europa.eu/comm/competition/antitrust/art82/ discpaper2005.pdf.
13. See European Comm'n, DG Competition, Guidance on the Commission's Official Enforce- ment Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings (Dec. 3, 2008) [hereinafter Guidelines], available at http://ec.europa.eu/- competition/antitrust/art82/ guidance.pdf.
14. We do not analyze the Commission Decision because our focus is how the CFI's Judg- ment will affect EC law and Commission practice going forward. A full analysis of the Commission Decision, and its legal and factual analysis, is beyond the scope of this article.
15. Commission Decision 2004, supra note 2, ¶ 472 (dominance standard);
16. Commission Decision 2004, supra note 2, id. ¶ 880 (mar- ket share).
17. Commission Decision 2004, supra note 2, Id. ¶ 49.
18. See also CFI Decision 2007, supra note 2, ¶ 39 (Judgment Section).
19. Commission Decision 2004, supra note 2, ¶ 1008.
20. Press Release, European Comm'n, Antitrust: Commission Ensures Compliance with 2004 Decision Against Microsoft (Oct. 22, 2007), available at http://europa.eu/rapid/- pressReleasesAction.do?reference=IP/07/1567&format= HTML&aged=0&language=EN& guiLanguage=en: First, "open source" software developers will be able to access and use the inter- operability information. Second, the royalties payable for this information will be reduced to a nominal one-off payment of €000. Third, the royalties for a worldwide licence including patents will be reduced from 5.95% to 0.4% - less than 7% of the royalty originally claimed. In these agreements between third party developers and Microsoft, Microsoft will guarantee the completeness and accuracy of the information provided. The agreements will be enforceable before the High Court in London, and will provide for effective remedies, in- cluding damages, for third party developers in the event that Microsoft breaches those agreements. Effective private enforcement will therefore complement the Commission's public enforcement powers. These changes mean that open source competitors to Microsoft will be able to provide businesses with competi- tive, innovative alternatives to Microsoft work group server products, knowing that they are fully interoperable with Microsoft's Windows desktop operating system. The Commission will now adopt a decision as soon as possible on the pending non-compliance case regarding past unreasonable pricing for the inter- operability information, on which the Commission sent a Statement of Objec- tions on 1 March 2007 (see IP/07/269). Microsoft also has ongoing obligations to continue to comply with the Commission's 2004 Decision: should Microsoft fail to comply with those obligations in the future the Commission can issue a new decision to impose daily penalties.
21. See id.
22. Commission Decision 2004, supra note 2, ¶ 425.
23. Commission Decision 2004, supra note 2, Id ¶ 833.
24. Commission Decision 2004, supra note 2, Id ¶¶ 879-881.
25. Commission Decision 2004, supra note 2, Id ¶ 897.
26. Commission Decision 2004, supra note 2, Id. ¶ 920. Note that these percentages are based on media players that had streaming capabilities that were included in the Commission's market for streaming media players.
27. Commission Decision 2004, supra note 2, ¶ 1011.
28. Commission Decision 2004, supra note 2, Id. ¶ 1013(iii).
29. Under CFI practice the case was assigned to a "Judge Rapporteur," who was responsi- ble for drafting a preliminary report to the Chamber containing his recommendations as to the final judgment. The President of the CFI appoints a Judge Rapporteur when the President has first set the Chamber that will deal with a particular case. This procedure is set out in the Rules of Procedure of the Court of First Instance, 1999 O.J. (L 136) and corrigenda, art. 13, 14, available at http://curia.europa.eu/en/instit/txtdocfr/ txt senvigueur/txt7.pdf.
30. The Judge Rapporteur in Microsoft's appeal at the CFI was John Cooke. See Simon Taylor, New Judge Named in Microsoft-EU Case, INFOWORLD, July 11, 2005, http://www.infoworld.com/article/05/07/11/HNnewjudge-1.html?WEB%20SERVERS. Judgments are reached by consensus among the judges and no dissenting opinions are prepared. Most cases before the CFI are heard by five judges in one of several chambers. The judges deliberate their final judgment based on the report by the Judge Rapporteur. The CFI has the ability to decide to have cases heard by the Grand Chamber, and did so in this matter. This case was decided by the Grand Chamber presided over by the Presi- dent of the CFI, who was Bo Vesterdorf at the time.
31. See CFI Decision 2007, supra note 2, ¶¶ 85-90.
32. CFI Decision 2007, supra note 2, Id. ¶ 87.
33. CFI Decision 2007, supra note 2, Id. ¶ 88.
34. CFI Decision 2007, supra note 2, Id. ¶¶ 89, 482;
35. see also 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.
36. CFI Decision 2007, supra note 2, ¶¶ 87, 380-381, 391, 421, 457, 526, 530, 534, 557, 618, 649, 665, 683.
37. See infra Part III.C.
38. CFI Decision 2007, supra note 2, ¶ 284.
39. CFI Decision 2007, supra note 2, Id. ¶ 336. The CFI indicated: "Only if it finds that one or more of those circum- stances [as identified in Magill and IMS Health - see Section B. below] are absent will the Court proceed to assess the particular circumstances invoked by the Commission [leading to the Commission's finding that the conduct was abusive]."
40. See CFI Decision 2007, supra note 2, id. ¶¶ 369-436 (indispensability), ¶¶ 479-620 (elimination of competition), ¶¶ 643-665 (preventing a new product), ¶¶ 688-711 (objective justifications).
41. CFI Decision 2007, supra note 2, Id. ¶¶ 648-650.
42. See CFI Decision 2007, supra note 2, id. ¶ 712.
43. See CFI Decision 2007, supra note 2, id. ¶ 859.
44. See Case C-53/92 P, Hilti AG v. Comm'n, 1994 E.C.R. I-667 (Eur. Ct Justice) (Hilti II), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=CELEX:61992J 0053:EN:HTML;
45. see also Case T-30/89, Hilti AG v. Comm'n, 1991 E.C.R. II-1439 (Ct. First Instance) (Hilti I), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri= CELEX:61989A0030:EN:HTML (CFI's judgment)
46. ; Case IV/30.787 & 31.488 - Eurofix- Bauco v. Hilti, Comm'n Decision, 1988 O.J. (L 65) 19 (Hilti Comm'n Decision), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31988D0138: EN:HTML.
47. See Case T-83/91, Tetra Pak Int'l SA v. Comm'n, 1994 E.C.R. II-755 (Ct First In- stance) (Tetra Pak I), available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do? uri=CELEX:61991A0083:EN:HTML,
48. aff'd, Case G333/94 P, Tetra Pak Int'l SA v. Comm'n, 1996 E.C.R. I-5951 (Eur. Ct Justice) (Tetra Pak II), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61994J0333:EN:HTML);
49. see also CFI Decision 2007, supra note 2, ¶¶ 293, 859 (also referring to Tetra Pak I).
50. See CFI Decision 2007, supra note 2, ¶¶ 856, 945-949, 960-975, 1148-1150.
51. CFI Decision 2007, supra note 2, Id. ¶¶ 971, 1034, 1040.
52. See e.g. 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/LexUri Serv/LexUriServ.do?uri=CELEX:62001J0418:EN:HTML;
53. see also Case C-7/97, Oscar Bron- ner GmbH & Co. KGv. Mediaprint Zeitungs, 1998 E.C.R. I-7791(Eur. Ct Justice) (access to home delivery system of newspapers), available at http://eur-lex.europa.eu/LexUri Serv/LexUriServ.do? uri=CELEX:61997J0007:EN:HTML;
54. 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) (refusal to license copyright works, TV program listings), availa- ble at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61991J0241: EN:HTML;
55. Hilti II, 1994 E.C.R. I-667; Case C-41/90, Klaus Höfner v. Macrotron GmbH, 1991 E.C.R. I-1979 (Eur. Ct. Justice), available at http://eur-lex. europa.eu/LexUriServ/- LexUriServ.do?uri=CELEX:61990J0041:EN:HTML;
56. CASE 238/87, AB Volvo v. Erik Veng (UK) Ltd., 1988 E.C.R. 6211(Eur. Ct. Justice), available at http://eur-lex.europa.eu/Lex UriServ/LexUriServ.do?uri= CELEX:61987J0238:EN:HTML;
57. Hilti I, 1991 E.C.R. II-1439; Case 53/87, Consorzio Italiano Della Componentistica di Ricambio per Autoveicoli v. Régie Nationale des Usines Renault, 1988 E.C.R. 6039(Eur. Ct Justice), available at http:/ /eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61987J0053:EN:HTML;
58. Case 226/84, British Leyland Pub. Ltd. v. Comm'n, 1986 E.C.R. 3263 (Eur. Ct Justice), availa- ble at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=CELEX:61984J0226: EN:HTML;
59. Case No. 77/77 Benzine en Petroleum Handelsmaatschappij BV v. Comm'n, 1978 E.C.R. 1513 (Eur. Ct. Justice), available at http://eur-lex.europa.eu/ LexUriServ/Lex UriServ.do?uri=CELEX:61977J0077:EN:HTML;
60. Case 27/76, United Brands Co. v. Comm'n, 1978 E.C.R. 207 (Eur. Ct Justice), available at http://eur-lex.europa.eu/LexUri Serv/LexUriServ.do?uri= CELEX:61976J0027:EN:HTML;
61. Joined Cases 6 & 7/73, Instituto Chemioterapico Italiano S.p.A & Commercial Solvents 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;
62. COMP/38.096, Clearstream, Comm'n Decision (Clearing and Settlement), June 2, 2004 (informational decision, not an official publication ), avail- able at http://ec.europa.eu/comm/competition/antitrust/cases/decisions//38096/en. pdf?bcsi-scan-DA3493EE5FC9D524=0&bcsi-scan-filename=en.pdf;
63. COMP/C-1/- 36.915 - Deutsche Post AG, Comm'n Decision, 2001 O.J. (L 331) 40, available at http://- eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L: 2001:331:0040:0078:EN:PDF;
64. Case T-111/96, ITT Promedia NV v. Comm'n, 1998 E.C.R. II-2937 (Ct. First Instance), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:61996A01 11:EN:HTML;
65. Case IV/34.689, Sea Containers v. Stena Sealink, Comm'n Decision, 1994 O.J. (L 15) 8, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri= CELEX:31994D0019:EN:HTML;
66. Hilti Comm'n Decision, 1988 O.J. (L 65) 19; Case IV/- 30.178, Napier Brown-British Sugar plc, Comm'n Decision, 1988 O.J. (L 284) 41, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31988D05 18:EN:HTML;
67. Case IV/32.318, London European-Sabena, Comm'n Decision, 1988 O.J. (L 317) 47, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:31988D0589:EN:HTML;
68. Case IV/32.279, BBI/Boosey & Hawkes, Comm'n Deci- sion, 1987 O.J. (L 286) 36, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=CELEX:31987D0500:EN:HTML;
69. Case IV/29877, British Telecomms., Comm'n Decision, 1982 O.J. (L360) 36, available at http://eur-lex.europa.eu/LexUriServ/LexUri Serv.do?uri=CELEX: 31982D0861:EN:HTML;
70. Case IV/26 918, Eur. Sugar Indus., Comm'n Decision, 1973 O.J. (L 140) 17, available at http://eur-lex.europa.eu/LexUriServ/LexUri Serv.do?uri=CELEX: 31973D0109:EN:HTML.
71. See Magill, 1995 E.C.R. 1-743.
72. See id. ¶ 2.
73. Id. ¶ 54.
74. Id. ¶ 55.
75. Id.
76. See generally Case C-7/97, Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs, 1998 E.C.R. I-7791 (Eur. Ct Justice).
77. Delivered on May 28, 1998, available at http://eur-lex.europa.eu/ LexUriServ/Lex- UriServ.do?uri=CELEX:61997J0007:EN:HTML. An Advocate General is appointed for the specific case by the First Advocate General once the written procedure is over and the oral procedure begins. The appointed Advocate General is, together with the appointed Judge Rapporteur, responsible for monitoring the progress of the case they are assigned to. The cases at the Court are argued by the parties at a public hearing, before the bench and the Advocate General. Some weeks later the Advocate General delivers his or her opinion before the Court at a public hearing. The Advocate General's opinion is a de- tailed analysis of the legal aspects of the case, including an independent suggestion to the Court of the response the Advocate General would recommend. When deciding on the case the bench will take the opinion of the Advocate General into account.
78. See The Court of Justice, European Union Institutions & Other Bodies, http://europa.eu/institutions/ inst/justice/index-en.htm.
79. Opinion of Advocate General Jacobs, Bronner, 1998 E.C.R. I-7791, ¶ 61.
80. Bronner, 1998 E.C.R. I-7791, ¶ 38.
81. Bronner, Id. ¶¶ 42-43.
82. See Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, 2004 E.C.R. 1-5039 (Eur. Ct Justice).
83. Opinion of Advocate General Tizzano, IMS Health, 2004 E.C.R. I-5039, ¶ 20.
84. IMS Health, 2004 E.C.R. I-5039, ¶ 38.
85. Magill, 1995 E.C.R. I-743, ¶¶ 50, 53-56.
86. Technically, a per se offense does not exist under Article 82 as it is open to the dominant firm to raise the defense of objective justification. However, given that objective justifications have had no practical relevance in Article 82 proceedings, the use of the notion of per se offense seems justified.
87. See David S. Evans, Economics and the Design of Competition Law, in ISSUES IN COMPETI- TION LAW AND POLICY 99 (W. Dale Collins ed., 6th ed. 2008).
88. Case C-7/97, Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs, 1998 E.C.R. I- 7791, ¶ 41 (Eur. Ct. Justice).
89. See also IMS Health, 2004 E.C.R. I-5039, ¶ 38 (ECJ stating: It is clear from that case-law that, in order for the refusal by an undertaking which owns a copyright to give access to a product or service indispensable for carrying on a particular business to be treated as abusive, it is sufficient that three cumulative conditions be satisfied, namely, that that refusal is preventing the emergence of a new product for which there is a potential consumer de- mand, that it is unjustified and such as to exclude any competition on a secon- dary market);
90. 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, ¶ 56 (Eur. Ct. Justice).
91. In Magill, the ECJ held that "the appellants, by their conduct, reserved to themselves the secondary market of weekly televi- sion guides by excluding all competition on that market since they denied access to the basic information which is the raw material indispensable for the compilation of such a guide."
92. See Joined Cases 6 & 7/73, Instituto Chemioterapico Italiano S.p.A. Sc Commercial Solvents Corp. v. COMM'N, 1974 E.C.R. 223, ¶ 25) (Eur. Ct Justice)).
93. See, e.g., ROBERT O'DONOGHUE & JORGE A. PADILLA, THE LAW AND ECONOMICS OF ARTICLE 82 EC 440-42 (2006);
94. see also Christian Ahlborn, David Bailey & Helen Crossley, An Antitrust Analysis of Tying: Position Paper, in GCLC RESEARCH PAPERS ON ARTICLE 82 EC 166-216 (Damien Geradin ed., Global Competition Law Center July 2005).
95. See CFI Decision 2007, supra note 2, ¶ 107.
96. NDC made the same claim regarding the data collection structure developed by IMS Health for Germany. See IMS Health, 2004 E.C.R. I-5039, ¶ 11.
97. Subsequently, in IMS Health, the ECJ left much ambiguity on how much differentia- tion one needs to meet this test. Consider television guides. Suppose Magill had wanted to supply the BBC's television listings which the BBC presented in its own magazine in a different format - a guide with a different color, better paper, or bundled with different content. It is not clear which, if any, of those differences together or combined, would qualify as a new product.
98. See CFI Decision 2007, supra note 2, ¶¶ 2-3.
99. Commission Decision 2004, supra note 2, ¶ 507,
100. aff'd, CFI Decision 2007, supra note 2, ¶ 33.
101. See CFI Decision 2007, supra note 2, ¶¶ 561-562.
102. CFI Decision 2007, supra note 2, Id. ¶ 563.
103. See CFI Decision 2007, supra note 2, id. ¶ 385.
104. See CFI Decision 2007, supra note 2, id. ¶¶ 433, 583-594.
105. Bo Vesterdorf, former President of the CFI and member of the Grand Chamber that entered the Microsoft Judgment, acknowledged in a March 2008 speech that the judgment weakened the indispensability and elimination of competition prongs of the Magill/IMS test. According to an article in Reuters: Vesterdorf said that many critics believe the decision weakened patent law and the rights of patent holders to do as they wished with their intellectual property. There was no doubt that the CFI had significantly enhanced the audiority of the Commission beyond its rulings in earlier cases, he said, giving it "a wide margin of appreciation." For example, until now the Commission could step in only if a company eliminated all competition, he said. With the decision, the Commis- sion can act if a company merely eliminates "effective competition" without actu- ally getting rid of a rival.
106. David Lawsky, EXCLUSIVE - EU Microsoft Judge Fears Decision May Hurt Investment, REUTERS, Mar. 12, 2008, available at http://www.reuters.com/article/ reutersEdge/idUSL1254538 020080312?pageNumber=1&virtualBrandChannel= 0&sp=true.
107. See CFI Decision 2007, supra note 2, ¶¶ 630, 647-649.
108. CFI Decision 2007, supra note 2, Id. ¶¶ 647-648.
109. CFI Decision 2007, supra note 2, Id. ¶ 665.
110. For a discussion of weak and strong per se tests, see Evans, supra note 59.
111. CFI Decision 2007, supra note 2, ¶¶ 316, 319, 321-132, 336.
112. CFI Decision 2007, supra note 2, Id. ¶ 665.
113. CFI Decision 2007, supra note 2, Id. ¶¶ 563-564, 567, 593.
114. See Guidelines, supra note 12, ¶ 85.
115. Tying may also be regarded as a restrictive practice under Article 81. See Commission Notice, Guidelines on Vertical Restraints, 2000 O.J. (C 291) 1, § 2.7, ¶¶ 215-224, available at http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri=OJ:C:2000:291:0001:0044: EN:PDF.
116. See, e.g., Case T-83/91, Tetra Pak Int'l SA v. Comm'n, 1994 E.C.R. II-755 (Ct First Instance), aff'd, Case C-333/94 P, Tetra Pak Int'l SA v. Comm'n, 1996 E.C.R. I-5951 (Eur. Ct. Justice) (Tetra Pak II);
117. see also Case 311/84, Centre Belge d'Etudes de Marché - Telemarketing (CBEM) SA v. Compagnie Luxembourgeoise de Télé diffusion SA, 1985 E.C.R. 3261 (Eur. Ct. Justice), available at http://eur-lex.europa.eu/LexUriServ/Lex- UriServ.do?uri=CELEX:61984J0311:EN: HTML;
118. Case 322/81, NV Nederlandsche Banden- Industrie Michelin v. Comm'n, 1983 E.C.R. 3461 (Eur. Ct. Justice) (Michelin II), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61981J0322: EN:HTML;
119. Case COMP/A.39.116/B2 - Coca-Cola, Comm'n Decision, 2005 O.J. (L 253) 21, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005: 253: 0021:0021:EN:PDF;
120. Case COMP/37.859 - De Post-La Poste, Comm'n Decision, 2002 O.J. (L 61) 32, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:20 02:061:0032:0053:EN:PDF;
121. Case IV/32.318 - London European - SABENA, Comm'n De- cision, 1988 O.J. (L 317) 47, available at http://eur-lex.europa.eu/LexUriServ/LexUri Serv.do?uri=CELEX:31988D0589:EN:HTML;
122. Case IV/30.178 - Napier Brown - British Sugar, Comm'n Decision, 1988 O.J. (L 284) 41, available at http://eur-lex.europa.eu/Lex UriServ/LexUriServ.do? uri=CELEX:31988D0518:EN:HTML;
123. Case IV/30.849 - IBM Per- sonal Computers, Comm'n Decision, 1984 O.J. (L 118) 24, available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:31984D0233:EN:HTML;
124. Case IV/ 29.491 - Bandengroothandel Frieschebrug BV/ NV Nederlandsche Banden-Industrie Michelin, Comm'n Decision, 1981 O.J. (L 353) 33 (Michelin I), available at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX: 31981D0969:EN:HTML;
125. Case IV/ 26.918 - Eur. Sugar Indus., Comm'n Decision, 1973 O.J. (L 140) 17, available at http://- eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX: 31973D0109:EN:HTML;
126. Case IV/26.760 - GEMA I, Comm'n Decision,1971 O.J. (L 134) 15;
127. Case IV/30.787 & 31.488 - Eurofix-Bauco v. Hilti, Comm'n Decision, 1988 O.J. (L 65) 19 (Hilti Comm'n Decision);
128. EUROPEAN COMM'N, XXVITH REPORT ON COMPETITION POLICY (1996), pt. I.C ¶ 64 (A.C. Nielsen tying case), available at http://ec.europa.eu/comm/ competition/annual-reports/rap96en-en.pdf;
129. Ahlborn et al., supra note 61, at 185-191
130. Hilti Comm'n Decision, 1988 O.J. (L 65) 19.
131. Tetra Pak II, 1996 E.C.R. I-5951, ¶¶ 116-120.
132. See Hilti Comm'n Decision, 1988 O.J. (L 65) 19, ¶¶ 97-98. The ECJ ultimately dis- missed the appeal in Hilti II. Case C-53/92 P, Hilti AG v. Comm'n, 1994 E.C.R. I-667 (Eur. Ct. Justice).
133. See also Commission Decision 2004, supra note 2.
134. See, e.g., Hilti Comm'n Decision, 1988 O.J. (L 65) 19, ¶ 76.
135. Id. ¶ 55.
136. Case T-30/89, Hilti AG v. Comm'n, 1991 E.C.R. II-1439, ¶¶ 115-119 (Ct. First In- stance) (Hilti I).
137. Jefferson Parish Hosp. Dist No.2 v. Hyde, 466 U.S. 2 (1984).
138. In certain circumstances, U.S. policy has even openly shifted towards a rule of reason approach. See, e.g., United States v. Jerrold Elees. Corp., 365 U.S. 567 (1961) (per curiam);
139. Monsanto Co. v. Mitchell Scruggs, 459 F.3d 1328, 1341 (Fed. Cir. 2006);
140. Reifert v. South Central Wise. MLS Corp., 450 F.3d 312, 317 n.2 (7th Cir. 2006);
141. U.S. Philips Corp. v. ITC, 424 F.3d 1179, 1193 (Fed. Cir. 2005);
142. see generally Grappone Inc. v. Subaru of New England, 858 F.2d 792, 799 (1st Cir. 1988).
143. Id. ¶¶ 1356-1357.
144. See Commission Decision 2004, supra note 2, ¶ 804.
145. Commission Decision 2004, supra note 2, Id. ¶ 824. To see the difference in positions suppose that there are two features A and B, which can be combined in various ways. The Commission claimed that A and B were separate products because B was sold separately. Microsoft claimed that AB was a single product because there was no significant demand for A by itself given that AB was also available. Therefore, it claimed that the two products at issue were AB and B.
146. CFI Decision 2007, supra note 2, ¶ 920.
147. CFI Decision 2007, supra note 2, Id. ¶ 921.
148. CFI Decision 2007, supra note 2, Id.
149. CFI Decision 2007, supra note 2, Id. ¶ 922.
150. See Press Release, European Comm'n, Microsoft - Questions and Answers on Com- mission Decision (Mar. 24, 2004), available at http://europa.eu/rapid/ pressReleases Action.do?reference=MEMO/04/70&format=HTML&aged= 1&language=EN&gui Language=en.
151. See Commission Decision 2004, supra note 2, ¶¶ 804, 841, 858-859, 968, 1037.
152. See Commission Decision 2004, supra note 2, id. ¶¶ 843-778, 919, 937, 944, 946.
153. CFI Decision 2007, supra note 2, ¶ 1058.
154. CFI Decision 2007, supra note 2, Id. ¶ 1055.
155. Case IV/D-2/34.780 - Virgin/British Airways, Comm'n Decision, 2000 O.J. (L 30) 1, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ: L:2000:030:00 01:0024:EN:PDF.
156. See id. ¶¶ 88, 120.
157. CFI Decision 2007, supra note 2, ¶¶ 293, 859-860;
158. CFI Decision 2007, supra note 2, id. ¶¶ 892, 901, 920-922, 953, 1339, 1354 (referring to Hilti and Tetra Pak cases);
159. CFI Decision 2007, supra note 2, id. ¶¶ 897, 910, 927, 942 (referring to Tetra Pak).
160. See Guidelines, supra note 12, ¶¶ 46-61.
161. See Guidelines, supra note 12, id. ¶ 49.
162. See DG Competition, supra note 11.
163. See REPORT BY THE EAGCP, AN ECONOMIC APPROACH TO ARTICLE 82 (July 2005), avail- able at http://ec.europa.eu/competition/publications/studies/eagcp-july- 21-05.pdf.
164. For an overview of ordoliberalism, see, for example, David J. Gerber, Ordoliberalism: A New Intellectual Framework for Competition Law, in LAW AND COMPETITION IN TWENTIETH CEN- TURY EUROPE 232 (1998);
165. Christian Ahlborn & Carsten Grave, Walter Eucken and Ordoliber- alism: An Introduction from a Consumer Welfare Perspective, 2 COMPETITION POL'Y INT'L 197 (2006);
166. Victor J. Vanberg, The Freiburg School: Walter Eucken and Ordoliberalism (Walter-Eu- cken-Institut, Freiburg Discussion Papers on Constitutional Economics 04/11), available at http://opus.zbw-kiel.de/volltexte/2004/2324/pdf/ 04-11bw.pdf;
167. Nils Goldschmidt & Arnold Berndt, Leonhard Miksch (1901-1950): A Forgotten Member of the Freiburg School, 64 AM. J. ECON. & Soc. 973 (2005), available at http://findarticles.eom/p/articles/mi-m025 4/is-/ai-n15878668.
168. According to Walter Eucken: The supplier and the customer always - wherever possible - seek to avoid com- petition and to acquire or assert monopolistic positions. There is an omnipres- ent, strong and irrepressible urge to eliminate competition and to acquire a monopolistic position. Everyone espies possibilities of becoming a monopolist. Why should three bakers in a 13th century town compete with one another? They could simply come to an agreement and create a monopoly. This was the situation earlier and the same applies today.
169. Walter Eucken, Die Wettbewerbsordnung und ihre Verwirklichung, 2 ORDO: JAHRBUCH FUR DIE ORDNUNG VON WIRTSCHAFT UND GESELLSCHAFT 1 (1949),
170. translated in Christian Ahlborn & Carsten Grave, The Competitive Order and its Implementation, 2 COMPETITION POL'Y INT'L 219, 222 (2006).
171. Christian Ahlborn & Carsten Grave, The Competitive Order and its Implementation, 2 COMPETITION POL'Y INT'L 219, Id. at 241. (2006).
172. Christian Ahlborn & Carsten Grave, The Competitive Order and its Implementation, 2 COMPETITION POL'Y INT'L 219, Id. (2006).
173. Christian Ahlborn & Carsten Grave, The Competitive Order and its Implementation, 2 COMPETITION POL'Y INT'L 219, Id. at 242. (2006).
174. See e.g., Case IV/D-2/34.780 - Virgin/British Airways, Comm'n Decision, 2000 O.J. (L 30) 1.
175. Case T-203/01, Michelin v. Comm'n, 2003 E.C.R. II-4071 (Ct. First Instance), availa- ble at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= OJ:C:2003:304:0024:00 24:EN:PDF;
176. Case T-219/99, British Airways plc v. Comm'n, 2003 E.C.R. II-5917 (Ct First Instance).
177. See, e.g., Case T-201/04 R, Microsoft Corp. v. Comm'n, 2004 E.C.R. II-4463, ¶ 400 (Ct. First Instance, Dec. 12, 2004) (Order) (referring to Michelin, 2003 E.C.R. II-4071, ¶ 239;
178. British Airways plc 2003 E.C.R. II-5917, ¶ 293);
179. Case C-95/04P, British Airways plc v. Comm'n, 2007 E.C.R. I-2331, ¶ 30 (Eur. Ct. Justice);
180. Press Release, Court of First In- stance, Questions and Answers - Order of the President of the Court of First Instance in Case T-201/04 R, Microsoft Corp. vs European Commission, 22.12.04 (Dec. 22, 2004), available at http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/04/305& format=HTML&aged=1&language=EN&guiLanguage=en.
181. Virgin/British Airways, 2000 O.J. (L 30) 1, ¶ 107. 118;
182. CFI Decision 2007, supra note 2, ¶ 1046.
183. CFI Decision 2007, supra note 2, Id. ¶ 1038 (emphasis added).
184. CFI Decision 2007, supra note 2, Id. ¶ 652;
185. see also Commission Decision 2004, supra note 2, ¶ 819.
186. CFI Decision 2007, supra note 2, ¶ 1046.
187. Commission Decision 2004, supra note 2, ¶¶ 843-878, 944, 946.
188. CFI Decision 2007, supra note 2, ¶ 1058.
189. CFI Decision 2007, supra note 2, Id. ¶ 1039.
190. See CFI Decision 2007, supra note 2, id. ¶¶ 1041, 1043, 1048.
191. CFI Decision 2007, supra note 2, Id. ¶ 1055.
192. CFI Decision 2007, supra note 2, Id. ¶ 665.
193. CFI Decision 2007, supra note 2, Id. ¶ 428.
194. CFI Decision 2007, supra note 2, Id. ¶ 664.
195. David S. Evans & Keith N. Hylton, The Lawful Acquisition and Exercise of Monopoly Power and its Implications for the Objectives of Antitrust, 4 COMPETITION POL'Y INT'L 203, 234-235 (2008).
196. Lawsky, supra note 71.
197. This relationship was known under the name of Structure-Conduct- Performance par- adigm, based on work by Edward S. Mason and Joe S. Bain. See generally JOE S. BAIN, BARRIERS TO NEW COMPETITION: THEIR CHARACTER AND CONSEQUENCES IN MANUFACTUR- ING INDUSTRIES (1956);
198. Edward S. Mason, Price and Production Policies of Large-Scale Enter- prise, 29 AM. ECON. REV. 61 (1939) (Supp.).
199. DENNIS W. CARLTON & JEFFERY M. PERLOFF, MODERN INDUSTRIAL ORGANIZATION 246-267 (4th ed. 2005).
200. Some commentators believe that some aspects of economic analysis - particularly that associated with the Chicago School - went too far in minimizing the possible an- ticompetitive effects of various kinds of unilateral conduct. However, there is a general consensus that there was no sound basis for the condemnation of various competitive practices by the U.S. courts prior to the 1970s. As Robert Pitofsky has put it, "[i]t is unani- mous that conservative economic analysis - often characterized as 'Chicago School Analy- sis' - demolished some aspects of the antitrust approach of the 1950s and 1960s (Warren Court period) and eventually displaced it with a more rigorous economic approach." HOW THE CHICAGO SCHOOL OVERSHOT THE MARK: THE EFFECT OF CONSERVATIVE ECO- NOMIC ANALYSIS ON U.S. ANTITRUST 7 (Robert Pitofsky ed., 2008).
201. David Spector, Loyalty Rebates: An Assessment of Competition Concerns and a Proposed Structured Rule of Reason, 1 COMPETITION POL'Y INT'L 89, 92 (2005).
202. United States v. Microsoft Corp., 253 F.3d 34, 85 (D.C. Cir. 2001).
203. Id. at 87.
204. Id.
205. Id.
206. The answer to this question is, of course, crucially dependent on the relative price of the two versions of Windows. If the price difference between the two versions is suffi- ciently large, then one can always expect demand for the naked version. The correct price difference between the full and naked version of Windows is dependent on the price for the stand-alone tied product. As WMP and other media players had been generally made available for free, the Commission was correct in not imposing a price difference for the two versions of Windows.
207. CFI Decision 2007, supra note 2, ¶ 920.
208. CFI Decision 2007, supra note 2, Id. ¶ 921.
209. CFI Decision 2007, supra note 2, Id. ¶¶ 1038-1039.
210. CFI Decision 2007, supra note 2, Id. ¶ 1041.
211. CFI Decision 2007, supra note 2, Id. ¶ 1046.
212. CFI Decision 2007, supra note 2, Id. ¶¶ 1046-1047.
213. CFI Decision 2007, supra note 2, Id. ¶ 1150.
214. CFI Decision 2007, supra note 2, Id. ¶¶ 1148-1150.
215. The Commission claimed that some companies wanted Windows without media play- ers to prevent their employees from using media players at work. Commission Decision 2004, supra note 2, ¶ 807.
216. The CFI pointed to this as evidence that there was demand for the unbundled product. CFI Decision 2007, supra note 2, ¶ 924. However, it is hard to see how this evidence could support a tying abuse since rival media player vendors could not be foreclosed from customers that do not want media players at all. In any event, com- puter manufacturers have not chosen to meet this claimed demand by offering Windows N.
217. The Commission would only go so far as admitting that media players were some- times available for free. Media players have long been distributed at no cost. In fact, RealNetworks stated, "From its inception, the Company has strategically chosen to offer its RealPlayer software to individual users free of charge to promote the widespread adop- tion of its client software and speed the acceptance of Internet multimedia." See RealNetworks Inc., Annual Report (Form 10-K) at 4, available at http://sec.gov/Archives/- edgar/data/1046327/0000891020-98-000455.txt In 2001,
218. when RealNetworks's CEO Rob Glaser was asked "What's the best move you've made," he responded, "Probably making the RealPlayer free." Amy Johns, If I Knew Then What I Know Now: Rob Glaser vs. Goliath, BUSINESS 2.0, May 2001.
219. See CFI Decision 2007, supra note 2, ¶ 943 (evidence based on Jean-Francois Bellis's presentation to the CFI on behalf of Microsoft). These findings went undisputed at the five-day oral hearing. CFI dismissed this evidence on the grounds that it could only con- sider evidence at the time the Commission Decision was adopted and that doubts consider- ing the effectiveness of a remedy do not prove that the separate product finding is wrong.
220. CFI Decision 2007, supra note 2, ¶ 943 Id.
221. The Guidelines actually speak about "distinct products," but for consistency reasons we continue to use the term "separate products."
222. Guidelines, supra note 12, ¶ 50.
223. Guidelines, supra note 12, ¶ 50 Id. ¶ 48 ("In the case of mixed bundling, often referred to as multi-product rebate, the products are also made available separately, but the sum of the prices when sold separately is higher than the bundled price.").
224. CFI Decision 2007, supra note 2, ¶¶ 918-919.
225. CFI Decision 2007, supra note 2, Id. ¶¶ 85-90.
226. CFI Decision 2007, supra note 2, Id. ¶ 87.
227. CFI Decision 2007, supra note 2, Id. ¶ 89.
228. The merger cases reviewed are the cases in which the Commission has found that the merger in question did constitute a merger under the EC Merger Regulation, and which have subsequently been challenged. The Article 82 cases reviewed are the cases where the Commission found that Article 82 had been infringed, and where these decisions have subsequently been challenged. Only decisions made since 1990, i.e., since the current merger regime came into force, have been reviewed.
229. Damien J. Neven, Competition Economics and Antitrust in Europe, 21 ECON. POL'Y 741, 761-62 (2006), available at http://papers.ssrn.com/sol3/papers.cfm? abstract-id= 934010#. Neven continues: [T] here is otherwise no clear benchmark to evaluate the absolute level of the success rate with respect to the Merger Regulation and Article 81; given the deference that the court gives to the Commission's analysis [. . .], one would expect the Commission to prevail in most "marginal cases." Hence the success rate of the Commission in (infra-marginal) cases in which the parties believe that the Commission's analysis was biased possibly as a result of a systemic prob- lem is likely to be lower than [the Commission's success rates of 98% in Article 82 cases, 75% in Article 81 cases, and 58% in Merger Regulation cases.]. . . Seen in this light, a success rate around 60% may not impress, but this remains highly judgmental.
230. Damien J. Neven, Competition Economics and Antitrust in Europe, 21 ECON. POL'Y 741, (2006), Id. at 762 (footnote omitted).
231. CFI Decision 2007, supra note 2, ¶ 688.
232. CFI Decision 2007, supra note 2, Id. ¶ 561.
233. Minutes of Proceedings, Day Three, 21:23 at 68, Case T-201/04, Microsoft Corp. v. Comm'n (Ct. First Instance Apr. 26, 2006).
234. See Commission Decision 2004, supra note 2, ¶ 435 n.560.
235. The Guidelines emphasize the need to move away from a reliance on presumption of consumer harm, and to assess the actual or likely harm to consumers: "[T] his assessment will be made by comparing the actual or likely future situation in the relevant market with an appropriate [alternative scenario], such as the simple absence of the conduct in ques- tion. . . ." Guidelines, supra note 12, ¶ 20.
236. According to the Guidelines, "the Commission will focus on those conducts that are most harmful to consumers." Guidelines, supra note 12, Id. ¶ 5.
237. "With a view to preventing anticompetitive foreclosure, the Commission will nor- mally only intervene where the conduct concerned has already been or is capable of ham- pering competition from competitors which are as efficient as the dominant [firm]." Id. ¶ 22. "[. . .] This may well mean that competitors who deliver less to consumers in terms of prices, choice, quality and innovation will leave the market." Guidelines, supra note 12, Id. ¶ 6.
238. For example, the Guidelines point out that "the Commission will take into account the margin of error that may be caused by the uncertainties inherent in [its pricing] analysis" Guidelines, supra note 12, Id. ¶ 40.
239. Guidelines, supra note 12, Id. ¶ 21.
240. Guidelines, supra note 12, Id. ¶ 23.
241. Guidelines, supra note 12, Id. ¶¶ 29-30.
242. The different sector directorates of DG Competition each now have a designated "merger task force." Together and individually they are referred to as the "Merger Task Force" or "MTF."
243. See e.g, Case T-310/01, Schneider Elec. v. Comm'n, 2002 E.C.R. II-4071 (Ct. First Instance), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=CELEX: 62001A0310:EN:HTML;
244. Case T-5/02 Tetra Laval v. Comm'n, 2002 E.C.R II-4381 (Ct. First Instance), available at http://eur-lex.europa.eu/smartapi/cgi/sga-doc? smartapi!celex- plus!prod!CELEXnumdoc&numdoc=62002A0005&lg=en;
245. Case T-342/99 Airtours v. Comm'n, 2002 E.C.R. II-2585, (Ct. First Instance), available at http://eur-lex.europa.eu/- LexUriServ/LexUriServ.do?uri= CELEX:61999A0342:EN:HTML.
246. See DG Competition, supra note 11.
247. For example the CFI affirmed the Commission's decision to block the GE-Honeywell merger while rejecting virtually all of the speculative economic theories that were behind the Commission's reasoning.