CFI to tighten the screw on market dominance abuse

Competition lawyers are predicting that Europe’s competition regulators will pursue abuse of dominance cases with renewed vigour now that Microsoft’s record fine has been upheld by Europe’s Court of First Instance (CFI).

Last week (17 September) the CFI backed Microsoft’s record €497m (£345.33m) fine from 2004, which charged the software giant with abuse of dominant position in the way it was bundling together its Windows operating system and Windows Media Player (www.thelawyer. com, 17 September).

The 248-page judgment was a fillip to the European Commission, which has staked much of its reputation and resources on the case over the past nine years.

Last week’s good news for the Commission’s Directorate General for Competition (DG Comp) is in stark contrast to recent setbacks, including the CFI in 2006 quashing its decision to permit a merger between Sony and Bertelsmann Music Group.

It is also likely to influence DG Comp’s ongoing review into Article 82 of The Treaty of Rome, which covers abuse of dominant position.

The Microsoft decision upholds most of DG Comp’s original findings, with the exception of the creation of a trustee to monitor compliance at Microsoft.

Competition partner Marc Israel at Macfarlanes said: “This is a massive win for the Commission. This judgment will give the Commission renewed confidence to go after big companies that it believes have infringed competition law.

The Commission will be particularly pleased that its economic analysis withstood detailed scrutiny by the CFI as that’s where it’s fallen down in the past.”

The Microsoft judgment also coincided with a second major competition-related decision from the CFI, on Akzo Nobel (see page 4). On this, too, DG Comp was victorious. Sources close to the case said the timing of the judgments were not coincidental, but were due to the court’s president and one other reporting judge stepping down.

“They wanted to go out with a bang,” said a source.

Microsoft, advised by White & Case and competition boutique Van Bael & Bellis, now has two months to appeal the CFI’s decision, but only on matters of law rather than on fact. Furthermore, in 2006 the Commission penalised Microsoft €280.5m (£194.9m) for not complying with its 2004 fine.

The appeal for that penalty is continuing, with Microsoft advised by Covington & Burling head of EU competition David Hull.

He told The Lawyer that the CFI decision “undermined the incentive for technology companies to innovate”.

DG Comp commissioner Neelie Kroes stated after the CFI’s verdict that she will not tolerate non-compliance by Microsoft, which now faces potential further probes by the regulator.