The EU Microsoft case: tying abuse Per HellströmDG Competition, European Commission(speaking in a personal capacity - the views expressed are not necessarily those of the European Commission)
Some key aspects Microsoft has a virtual monopoly in the PC OS marketSpecific role of OEMs - assemble end product for consumers
Legal assessment of tying under Article 82 Based on consistent case law, e.g. Hilti, Tetra Pak IIDominance in tying product (PC OS)Two separate productsNo choice for customersNo objective justification/efficiencies
Dominance Microsoft is dominant on the PC OS marketMicrosoft has a very high and stable market shareFringe competitors: Apple and LinuxBarriers to entry are high: - Sunk cost (cost of developing OS)
- Applications barriers to entry (indirect network effect)
Separate products Distinctness to be assessed by reference to independent demandMicrosoft’s own practice confirms the Commission’s analysis- WMP exists for other operating systems
- No technical reasons to put the products together
“reposition [the] streaming media battle from NetShow vs. Real to Windows vs. Real” and “follow the [Internet Explorer] strategy wherever appropriate”
Coercion Windows could not be obtained without WMPWithin the meaning of Art. 82(d) ECBoth contractual and technicalWMP is not free of charge
Foreclosure of competition (I) Tying gives WMP unparalleled presence- This creates disincentives for OEMs and consumers
- Competition on the merits prevented (‘Microsoft’s competitors are a priori at a disadvantage even if their products are inherently better than Windows Media Player ’)
The CFI confirms that this is sufficient, but also looks at other factors
Foreclosure of competition (II) Indirect network effects mechanism- artificially induces content providers and software developers to the WMP platform
Actual evolution of the marketTying has a detrimental impact on innovation- ‘Microsoft interferes with the normal competitive process which would benefit users by ensuring quicker cycles of innovation as a consequence of unfettered competition on the merits ’
Objective justification Uniform platform argument- De facto standardisation should occur through competition, not monopoly extension
- Tying unnecessary for platform benefits
Technical benefits of ‘integration’
Conclusion The case is an important precedent - But not for every company in every industry
- Precise factual analysis relating to specific circumstances
Competition must always be assessed on the merits of the products
The EU Microsoft case: tying abuse Per HellströmDG Competition, European Commission(speaking in a personal capacity - the views expressed are not necessarily those of the European Commission)
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