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EU Ruling Deals Blow to Microsoft

September 17, 2007

In a long-awaited decision issued early this morning, the European Union’s Court of First Instance (CFI) rejected Microsoft’s appeal and upheld one of the most controversial decisions of the European Commission to date. The CFI, the second highest European court, affirmed the Commission’s substantive findings against Microsoft and upheld steep fines against the software supplier.

On March 24, 2004, the Commission found that Microsoft had violated Article 82 of the EC Treaty by abusing its “dominant” position, and imposed a fine of EUR 497 million. In its decision, the Commission pointed to two specific practices as violating EU competition law. First, by refusing to share certain information regarding Microsoft Windows with its competitors, Microsoft purposefully prevented the development and marketing of innovative software products that would allow interoperability between personal computers running the Windows Operating System and other computers running non-Microsoft software. The Commission further found that Microsoft improperly tied the supply of Windows Media Player to the purchase of the Windows Operating System.

To rectify these abuses, the Commission ordered Microsoft to disclose certain proprietary software specifications and to offer for sale a version of Windows without Windows Media Player. In order to monitor Microsoft’s compliance, the Commission provided for the appointment of a monitoring trustee who would report to the Commission regarding Microsoft’s progress.

Microsoft appealed the Commission’s decision and moved for an interim order to suspend the imposition of the remedies. The CFI, in the last judgment under its president Bo Vesterdorf who recently handed over his reins, dismissed Microsoft’s application to delay the penalties, and the Commission subsequently moved forward with imposition of the remedies. Today’s decision affirms the Commission’s findings and remedies, except as to certain aspects of the monitor trustee provisions.

The judgment is a significant victory of the Commission which will likely encourage the Commission to take on more Article 82 and notably refusal to deal as well as tying cases in the future. The reference to Article 82 (b) may even broaden the area of application for refusal of deal cases and ensuring interoperability may well be a goal the Commission is determined to ensure in other IT cases in the future.

For the CFI decision, click here.

For a summary of the decision, click to download the press release issued by the Court of First Instance. [PDF]

For the Commission’s reaction to the CFI decision, click for a linked press release.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Wm. Randolph Smith
Partner – Washington, D.C.
Phone: +1.202.624.2700