Recent Microsoft Decision Strains the Relationship Between the EU and the US

This week, the European Court of First Instance (for a short introduction to the EU judicial system visit my website) upheld a ruling by the European Commission imposing a $ 700 Million fine against Microsoft [link to decision]. The Court examined the following issues: (1) Microsoft's refusal to provide competitors with so-called "interoperability information", (2) Microsoft's "tying" of the Media Player to the Windows PC operating system, and (3) the Commission's decision to appoint a "monitoring trustee" in order to keep an eye on Microsoft's compliance with EU law. With regards to point (3) the Court found no legal basis in Community law for the appointment of a monitoring trustee. On point 1 and 2, however, the Court agreed with the Commission. The Court essentially based its decision on Microsoft's dominant position on the PC operating system market. According to the Court, a corporation with a dominant role may under certain circumstances be compelled to grant a license. After discussion of pertinent EU case law, the Court determined three such circumstances:

"– in the first place, the refusal relates to a product or service indispensable to the exercise of a particular activity on a neighbouring market;

– in the second place, the refusal is of such a kind as to exclude any effective competition on that neighbouring market;

– in the third place, the refusal prevents the appearance of a new product for which there is potential consumer demand."

For more information, please refer to the Court's decision. A good summary of the decision is provided by the press release which is available here.

With regards to the Windows Media Player, the Court essentially holds that customers should have a choice whether to have the Media Player or another competing product instead. Microsoft now has two months to file an appeal with the European Court of Justice.

The above-discussed judgment has turned sour the relationship between the United States and the European Union. Following the publication of the decision, Thomas Barnett, the US antitrust official, vehemently criticized the judgment. In his view, the decision could prove harmful to the consumer, cool down innovation, and discourage competition. The European Commissioner for Competition, Neelie Kroes, countered calling Barnett's statements unacceptable because he should not have criticized a court outside his jurisdiction. Reuters has more [news article, in English].

As globalization and internet foster transnationalism, shouldn't this also be reflected in the legal debate? Sure, the fact that a US state official expresses criticism with regards to a decision by a European Court may give such criticism more weight. Yet, differing opinions are inherent to the legal world, and even more so if different legal systems are involved. Ideally, such divergent opinions should initiate legal debate which might finally lead to a new consensus in the spirit of transnational law.