Court clarifies anti-trust law in Europe

The European Court of Justice Thursday set an important precedent that will become a reference point in Microsoft’s appeal against the recent European Commission anti-trust ruling against it, according to Brussels-based anti-trust lawyers. Although both sides in that pending court room battle claim that Thursday’s judgement helps them, the lawyers reckon it will help the regulator, not Microsoft.

The case involved one American drug distribution firm, IMS Health, suing another, NDC Health, for using its copyright-protected geographical breakdown of the German pharmaceutical market.

Although the final word in this case rests with a court in Frankfurt, Germany, the judgment by Europe’s highest court clarifies European law in this complex field, where intellectual property law and competition law meet.

A refusal by a dominant firm to license its copyright to rivals breaches competition law only if this prevents new products or services from coming to market, or if such a refusal is “capable of eliminating all competition on the relevant market,” the court said in a statement.

The judgment was welcomed by Microsoft and by the Commission, which last month ruled that the software giant had abused its dominance by not sharing vital copyright-protected information with competitors.

The regulator fined Microsoft €497 million ($595 million) and ordered it to license the information necessary for restoring competition in the market.

Ahead of its appeal of that ruling to the European courts, which is expected to be filed within a couple of months, Microsoft said the judgment “is a fatal blow to the Commission’s compulsory licensing case” against it.

Meanwhile, the Commission claimed that the judgment supports its ruling last month. “We believe that these exceptional circumstances as set out by the court have been met in the Microsoft case,” Commission spokeswoman Amelia Torres said.

Microsoft said its refusal to license copyright-protected information inside its Windows operating system does not stand in the way of the development of new products or services.

Rivals including Sun argue that this information is necessary for them to produce software for servers that can work as well with PCs running Windows as with Microsoft’s own server software. This is essential, they and the Commission argue, because over 95% of all PCs run on Windows. Servers connect networks of PCs.

“All of the competitors concerned have successful products on the market, so it is clear that Microsoft’s action has not prevented the launch of these products,” Microsoft said.

“It is clear from any view of the market that the Microsoft technologies concerned in the Commission’s case are not ‘indispensable,’ in the terms of the court judgment, as competition is flourishing,” the Microsoft statement added.

Torres said that the mere presence of rivals is no confirmation that competition is healthy. “Thank God there is still time to save competition,” she said, adding: “This case is about products made by rivals being able to talk with Microsoft products, to the benefit of consumers.”

One competition lawyer who asked not to be named said that if the court intended the European Union’s competition law only to forbid dominant firms from refusing to license their copyright when all rivals had been eliminated from the market, “this would render European competition law completely useless.”

He added that the court’s judgment should support the Commission, not Microsoft, in the appeal. “It sets a precedent that can only strengthen the Commission,” he said.