Microsoft's failed appeal start of a trend?

The European Commission got the green light from Europe’s second-highest court last week to pursue even more high-profile antitrust actions against dominant global companies.

In a landmark ruling making the commission the leading competition authority in the world, the Court of First Instance (CFI) threw out Microsoft’s appeal against a March 2004 European Union decision to fine it â,¬497million and force it to share information about its Windows operating system with rivals.

The court upheld the commission’s decision that the software group had also abused its dominance by illegally “bundling” its Media Player software into Windows.

It was a long-awaited and surprisingly one-sided judgement delivered in less than four minutes in Luxembourg by the retiring court president, Bo Vesterdorf.

Microsoft supporters see the ruling on a case initiated nine years ago as a blow to free enterprise, innovation and intellectual property rights. Its opponents claim an encouragement to fair competition, greater consumer choice, lower prices and fundamental changes in the group’s business model and practices.

Legal experts openly disagreed about how significant a precedent the ruling is, but several said it opened the floodgates for complaints to Brussels about the behaviour of superdominant companies.

Google, Apple and IBM are among those cited as being liable to challenges because of their dominant market share. Huge continental energy groups, due to be presented with proposals to “unbundle” or sell off their transmission activities, and even Airbus, the European plane-maker, were mentioned.

A jubilant Neelie Kroes, the competition commissioner, turned the screws on Microsoft by calling for a significant drop in its 95% market share in PC operating systems and demanding that it fully comply with the original 2004 decision.

“You can’t draw a line and say exactly 50% is correct, but a significant drop in market share is what we would like to see,” she told reporters.

The ruling, she said, strengthened the commission’s determination to pursue similar cases and put consumer bene­fit above innovation.

“This is an important precedent, and not just for this particular product on this particular market,” she said. “There’s no escape any more.”

The Dutch liberal and her officials held out the prospect of further punishment amid reports that Kroes is considering imposing a â,¬1billion fine for Microsoft’s failure to comply with the original decision. But she said it was “too early” to discuss and dismissed suggestions from Microsoft lawyers that the ruling would make Brussels the “litigation capital” of the world.

The court’s decision that Brussels wrongly imposed an independent trustee—Professor Neil Barrett of Imperial College, London—to monitor Microsoft’s compliance might stay her hand.

Brad Smith, Microsoft’s general counsel, said the firm was “100% committed” to complying with the commission’s 2004 decision, but issues about the price of licences to download protocols behind Windows and trade secrets remained to be settled.

Kroes, who described the CFI ruling as “bittersweet” because it confirmed consumers suffer at the hand of Microsoft, repeatedly demanded swift remedial action.

Smith refused to say whether Microsoft would seek to appeal to the European Court of Justice—possible only on points of law—but company advisers see this as unlikely because the judgement was based on case law and facts. They also point to Microsoft’s desire to spend more time and effort competing with new rivals such as Google while striking interoperability deals with former opponents Sun and AOL Warner.

Thomas Vinje, a lawyer at Clifford Chance acting for the European Committee for Interoperable Systems, a group including IBM and Linux “open source” operators, said the CFI had set “a clear standard for Microsoft’s future conduct” and showed that “no company, especially one with a superdominant position, is above the law”.—Â

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