EU Microsoft judge fears decision may hurt investment

The 13-judge Grand Chamber of the European Union’s second highest court handed down a sweeping ruling in September, upholding a tough European Commission decision saying Microsoft abused its dominance of PC operating systems to crush rivals. It also endorsed a €497 million (about $774 million) fine. “It would be unfortunate if it had a negative effect on the incentives to invest,” said Bo Vesterdorf, whose term as president of the Court of First Instance (CFI) and as a judge ended on the same day he announced the decision. In a speech at the Queen Mary School of Law of the University of London, he said that if investors backed off, innovation could suffer and consumers could be the losers. Vesterdorf regretted that Microsoft had failed to appeal his court’s decision and seek a definitive ruling from the EU’s highest court, the European Court of Justice.

Experts said the company’s chances would have been slim. The high court, which can only consider questions of law and leaves questions of fact to the lower court, has upheld the CFI in all other cases concerning abuse of dominance. The CFI ruling endorsed European Commission sanctions against Microsoft and said the company was unjustified in tying new applications to its Windows operating system in a way that squeezed out rivals and harmed consumer choice. It also agreed with the Commission finding, that Microsoft refused to give rival makers of office servers information to enable their products to interoperate smoothly with Windows. Vesterdorf spent most of his time talking about interoperability.

 
WEAKER PATENTS

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 authority of the European Commission beyond its rulings 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 Commission can act if a company merely eliminates “effective competition” without actually getting rid of a rival. Vesterdorf called the case highly unusual because no other company had Microsoft’s power and had acted in a similar way. Nonetheless, he said the decision and the broader authority it conveys make it incumbent on the European Commission to choose its cases carefully.

It was difficult to find the right balance between competition law and patent and copyright law, and that the balance could now be changed by legislators, he said. The decision would also benefit private litigants, he said after his speech. Vesterdorf said he was not criticizing the decision that went out over his signature. Vesterdorf is to publish an article based on his speech in the inaugural edition of an on-line Queen Mary student journal, The Global Antitrust Review. Maher Dabbah of Queen Mary said, it would be available starting on July 1 at www.icc.qmul.ac.uk.

The Commission has fined Microsoft €1.18 billion ($1.83 billion) for failing to carry out sanctions in its ruling from 2004. It also has some cases against other high tech firms, including one against Intel, the world’s largest chip maker. There was a two-day closed hearing in that case on Tuesday and Wednesday. (Reuters)