Commission slammed by Microsoft general counsel

As epic antitrust case reaches court, Smith calls for more objectivity in Brussels

Microsoft’s top lawyer last week criticised the European Commission’s competition disputes and policy process, calling for greater involvement of third parties in “precedent-setting” cases.

Microsoft general counsel Brad Smith was talking to The Lawyer ahead of the company’s hearing on interim measures in the European Court of First Instance, which began on 30 September.

The court appearance was the latest stage in Microsoft’s epic antitrust dispute, which began in September 1998. On 24 March this year the Commission found Microsoft guilty of abusing its dominant position in the personal computer desktop market because it was bundling together its Windows operating system and Windows Media Player. It fined Microsoft €497.3m (£339.9m) and ordered it to offer a version of Windows without Media Player. It also ordered it to license interface information to allow competitors to make their servers interoperable with Windows. Microsoft was seeking a suspension of these sanctions in court last week.

Smith told The Lawyer that the dispute would have benefited from the involvement of other parties from other industry sectors. “The competition policy process in Brussels would benefit from more involvement from people who are not direct competitors in these cases,” Smith said. “Hearings in Brussels today are perhaps characterised to a degree that is greater than optimal by debates between the company that is under scrutiny and its competitors. I think everyone benefits if there’s an opportunity for people who are a bit more detached, and perhaps a bit more objective, to provide their perspective.”

Smith said his team had been “very appreciative” of the fact that Airbus had offered to intervene on its behalf (it subsequently withdrew its offer). “We wholeheartedly agreed with their intellectual analysis [of the case],” said Smith. “We felt that they did a service to the broader public in pointing out that this would be a legal precedent that would have an adverse impact on other industries, like commercial aircraft manufacturers, who also produce products that consist of a variety of integrated components.”

Smith feels there is a need for broader discussion in Brussels of major precedent-setting issues, adding: “We would hope there might be more support in the Commission and in the [European] Community more generally for these kind of discussions in the future.”

Smith said he also believed there was “a strong need for greater transatlantic coordination” on antitrust issues – a comment that may not surprise anyone familiar with Microsoft’s legal battles. In November 2002, the US Department of Justice settled its case against the company without forcing it to rewrite code. As one lawyer close to the case, Clifford Chance’s Thomas Vinje, said: “It seems the US government has now abandoned the enforcement of competition law with regard to Microsoft.”

In contrast, the Commission has stayed the course and is now locked in a landmark battle with the software giant. The appeal, a separate process from last week’s hearing, is likely to double the length of a case that has already lasted more than five years.

THE ADVISERS

The scrum of photographers at the court last Thursday (30 September) reflected the frenzy this case has generated. In the glare of the flashbulbs was a who’s who of competition lawyers. They included:

For Microsoft: Senior vice-president, general counsel and corporate secretary Bradford Smith. Also White & Case and Van Bael & Bellis.

For the European Commission: A core team of four lawyers, including director of legal services Richard Wainwright.

Interveners included:

Novell – Lovells.
RealNetworks – Cleary Gottlieb Steen & Hamilton.
CCIA – Clifford Chance, Brick Court Chambers.
Software & Information Industry Association – Steptoe & Johnson.
Association for Competitive Technology – Sidley Austin Brown & Wood.
Teamsystem and Mamut – Covington & Burling.
DMDsecure.com, MPS Broadband, Pace Micro Technology, Quantel and Tandberg Television – Akin Gump Strauss Hauer & Feld.
Exor – Martinez Lage & Asociados.
Free Software Foundation Europe – Studio Legale Tamos Piana & Partners.