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The notion of abuse is one that could translate as the use of power (legal or illegal) to carry out a repeated process of mistreatment. In this form, abuse is a phenomenon that significantly relies on the captives having to share the same domain with the abusers. Cries for freedom, accompanied by the use of punitive sanctions, were recently made by the central antitrust authority within the European Union, the European Commission (the EC), against certain abusive practices carried out by Microsoft on its competitors in the markets for media-relaying components (streaming media applications), Windows operating server systems and work group server systems (WGS). 1 Abuse, in the sense of European Union (EU) antitrust rules, is however an objective concept. It is governed by the provisions of Article 82 of the EC Treaty of Rome and elementarily requires that the abuser be the dominant force in a particular market (generally denoted in case law by a market share of around 40 percent) and to have used that legally acquired dominant position in a manner contrary to what can be regarded as competition on the merits. Simply put, an abusive conduct within the competition laws of the EU is one that must not be independent of market power or whose effects are outside the jurisdictional boundaries of the EU. These two factors are usually crucial in defence of cases under Article 82: the first strand encapsulates notions such as the exercise of protected rights in intellectual properties and objective (or economically reasonable) justifications for the conduct under review, while the second focuses on the separation of jurisdictional boundaries and primarily relies on the effects doctrine. The latter factor, thus, ensures that the physical location or place of action carries little or no weight in cases as long as there are demonstrable effects of the conduct within the EU — as particularly reflected in this case by Microsoft (the complainee) and Sun Microsystems (the primary complainant) being companies registered and headquartered within the United States. A corollary consequence of this approach is that the sins of a subsidiary of a globally dominant firm could be paid for by its parent company, even if the latter operated well away from the EU and claimed to have no knowledge of the shenanigans leading to the allegations of abuse. REFUSAL TO SUPPLY The first of the two charges brought against Microsoft centered on its refusal to supply specifications (or communication protocols) necessary for its rivals to interoperate within the Windows environment. The Windows environment (or architecture) describes the seamless connections between WGS and Client PC Windows operating systems (where Microsoft is significantly dominant through the Windows operating system). In their simplest forms these products can be described as groups or network of computers using Windows operating and server systems connected to a central directory that enables them to share information on security and user accounts (stored and managed by domain controllers). They allow the user groups access to shared files, printing services and e-mails. These functionalities rely on the directory technologies within them: which generally allow servers to store information in a manner based on their properties (thereby allowing users to log-in once through their PCs to use several resources and relieving the network administrator the task of synchronizing the account lists of each resource within the domain computers). Thus efficient operations of these systems rely on the interoperability between the Client PC Windows operating system and the operating server system as well as server-to-server interactions. The practical effect of these mechanisms can be seen in large- or medium-size commercial organizations (or similar ones) utilizing computers that allow staff to log-in on any computer within their location and to share files and printing facilities. The gist of the case against Microsoft was that it was a late entrant into the WGS market and had initially supported the inherent practice of the industry in allowing interoperability of competing servers through providing competitors with the necessary information needed to align their products with its products (particularly, the Windows NT generation of operating systems). Subsequently, Microsoft refined the workings of its WGS and operating systems through utilizing, within the Windows domain (that is, the administrative unit center where WGS administer client PCs and work group server operating system), technologies relating to Windows 2000 Professional operating systems and the introduction of the Active Directory. While the use of this technologies simplified and improved the efficacy of the directory system and eased administration within the Windows domain, they also resulted in domain controllers (that is, managers of user accounts) relating differently in Windows 2000 systems (and its progeny) from the way they related to competing server systems set up for the Windows NT generation of operating systems. Microsoft allowed a migration from the old systems to Windows 2000 systems not running the Active Directory; the benefits of such upgrades were, however, only enjoyed through the setting up of Windows 2000 systems running the Active Directory in “native mode — which in essence eliminated from the upgrade the use of competing servers based on the old system of user account and authentication process (technically, domain architecture was switched from NTLM to a distinct “Kerberos” protocol). Similarly, the company shelved its distributed share file system (Dfs) format (which it allowed as an add-on that could be installed on client and server PCs running on Windows NT generation of operating systems) and included it as a “native support” both in the Windows 2000 WGS and operating systems. While the Dfs can still be installed as a stand-alone product in the Windows 2000 systems, it only operates effectively (in terms of effective retrieval of information from Client PCs) when run in systems using the Active Directory. Other measures that reduced interoperability of competing systems were also put in place and Microsoft refused to divulge the specifications necessary for rivals to interoperate within the Windows environment. Specifications in this sense relate to conditions that a product needs to meet (and not how it does so) in order to obtaining interoperability with another product, as opposed to outright disclosures of codes or trade secrets necessary to achieve interoperability. The conundrum here however is that in certain situations such disclosures might provide opportunities for rivals to discern the essence of the source codes (the protected rights). Yet, significant difficulties pave the way between obtaining specifications and carrying out implementations necessary for interoperability. Moreover, distinct implementation process could in general result in product differentiation and innovation. Therefore what is certain in a case like this is that the authorities are encumbered with the need to establish the degree of specifications necessary for disclosure in comparison to what is available and where it is available. The position of the EC was that Microsoft had taken advantage of its massive market power in the Client PC operating systems to lock away necessary resources needed for interoperability of competing rivals in both the Windows 2000 operating and server systems. It compelled disclosures of specifications on evidence that the disclosures were indispensable for the viability of rivals (thereby appearing to award little respect to the protected rights in the codes), restricted the emergence of new products and because there existed no objective justification that may warrant their non-disclosure. The EC’s decision was upheld on Sept. 17, 2007, by the Court of First Instance (the CFI), the second highest court within the EU. 2 The CFI found the EC case to be supported by the inherent industry practice, the existing market reality, documents retrieved from Microsoft and by legislation and EU case law supporting exceptional circumstances in which the veil of protected rights may be cast off. INDUSTRY INTEGRATED PRODUCTS The approach of the authorities in this case would appear to be one that supports propositions that efficiency should always be shared where possible. The nonexhaustive examples of prohibited conduct under Article 82 explicitly prohibit conduct of dominant firms, which limits technical developments. While this may send fears down the spine of innovators who frown against being compelled to adduce their products to another so as to improve them, this need not necessarily be the case as there exist tight requirements that need to be satisfied before intellectual property rights are discarded for the welfare needs of the market. Furthermore, the approach in the EU appears more relevant to cases of industry-enhanced integrated product (that is, products in which components of different producers brought together under one roof or products created through or motivated by industry standards). The hurdle to scale for antitrust purposes in such instances would relate to dispute between private entities and industry bodies over certification industry standards or disputes between private entities over interface connections (within an integrated platform) inextricably linked to parts forming the essence of the component. The key point from Microsoft is that the main determining factor would appear to be on the extent to which refusal to license restricts the development of a new product. Thus queries over the breadth of intellectual properties, the need to assess inherent industry practices and, of course, considerations over possibilities of damage to the goodwill of protected rights (if required to be unveiled) should be at the heart of a practitioner’s advice to clients over issues of refusal to supply. TYING The second charge against Microsoft was that it integrated its media-relaying component, Windows Media Player (WMP) with its dominant Windows operating system. The case, however, appears primarily to be one of contractual rather than technological tying in that the technological integration cemented Microsoft’s initial contractual refusal to license its operating system to computer manufacturers without attaching its Windows Media Player (WMP). The technological tying of the media player applications with the operating system ensured that the two products could not be dissociated without damage to the integrated system. The EC’s case that Microsoft had infringed the provision of Article 82 — particularly the enumerated example in 82(d) which prohibits the imposition of unnecessary supplementary conditions on consumers — was upheld by the CFI. Through market evidence (including documents originating from Microsoft’s market practices in promoting and selling the products under review) the court accepted that the tied product and tying products are separate; confirmed Microsoft’s dominance in the tying product market; judged that market-related factual evidence predominantly showed that the company had used its dominance in the tying product to deny consumers the choice of obtaining the tying product without the tied product and; that these practices foreclosed competition on the merits not only in the tied product market but also in related markets such as those pertaining to software developers. What is noteworthy about these aspects of the decision is that the authorities in the EU appear to no longer be satisfied that bundling automatically equates to market foreclosures. Assessments were carried out to confirm if the related markets could be dominated by the use of monopoly power in the main one and, of course, if the abusive practices in that downstream market were motivated by the need to prolong monopoly profits in the upstream market. Furthermore, this decision would seem to indicate that the treatment of exclusive dealing arrangements within the EU may no longer be as formalistic as it had been in past cases. In assessing the viability of supply of rivals’ media-relaying products, the commission and the CFI paid significant attention to the effectiveness of other routes of supply rather than assuming that the cutting-off of a dominant channel of supply equated to all routes into the market being hermetically sealed to competing products. CONCLUSION The big question posed in the aftermath of the decision is whether it will make a jot of a difference to the welfare of consumers. Assistant Attorney-General Thomas O. Barnet, in a hasty reply to the decision, unjustifiably queried its soundness and baselessly insinuated that it might not be helpful to consumers. 3 The reality, however, is that while a record fine of almost half a billion euros might not necessarily put a dent in the profits of a company that runs into several billions of dollars per year, the decision certainly will threaten the way dominant firms conduct their business within the EU (particularly their behavior towards the development of competition in related markets) and this may provide benefits to consumers in certain situations. Microsoft, however, did take something away from the decision. The CFI, on a procedural point, queried the legitimacy of certain powers delegated to the independent monitoring trustee and the position that Microsoft should pay for the services incurred in monitoring remedies. The CFI took the view that there exists a boundary to which such persons could act and that there is no legal basis for asking Microsoft to pay for their services. While the commission often uses such services and demands that firms pay for them in merger cases (particularly those requiring divestitures), it had hardly done so in relation to Article 82 cases. The consequence of this part of the decision is that in cases where obligations have not come from the party under review, 4 difficulties might ensue in structuring the duties of the monitoring trustees and extent of the share of the bill that is to be footed by the EC. Overall, this decision of the EC can be acknowledged as rivalling its finest hour in Consten & Grundig — where it set about a platform for addressing cases concerning restrictive agreements under the provision of Article 81. Microsoft has around two months from the time of the judgment to appeal on points of law to the Court of Justice of the European Union, the highest court within the EU. Femi Alese is the author of “Federal Antitrust and EC Competition Law Analysis” (Ashgate 2007). He is a solicitor of the Supreme Court of England and Wales and a member of the New York State Bar. Endnotes: 1. See Case COMP/C-3/37.792-re Microsoft OJ [2007] L32/23. 2. Case T-201/04 Microsoft v. Commission, Judgment of Sept. 17, 2007, nyr. 3. See, Assistant Attorney General for Antitrust Statement on “European Microsoft Decision” Department of Justice Press Release of Sept. 17, 2007. 4. See Case T-170/06, Alrosa v. Commission, Judgment of July 11, 2007 at paragraphs 88, 105 and 106, nyr.

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