Microsoft: appeal deadline is over

Article published on Nov. 15, 2007
Article published on Nov. 15, 2007

This article has not been vetted by an editor at Paris HQ

Abuses of dominant position and why as a private entity, the company is punished more severely than EU institutions and national governments who disregard the rights of ordinary citizens

On 17 September, the European Court of First Instance (ECFI) agreed on the 497, 196 304 euro fine imposed by the European Commission on Microsoft for abusing their dominant position. It's the highest financial sanction in the European legal history.

Two accusations against Microsoft

In this case, the abuse of dominant position consists of two branches. Firstly, it is Microsoft's refusal to communicate to its competitors its interoperability specifications which prevents them from making their software fully compatible with the Windows system. In other words, the non-communication of the specifications is an obstacle for running certain programmes of competitors on the Windows PCs. Microsoft argue that they didn't need to say anything, as technically, five other technical methods existed which ensured interoperability. In addition, this information was protected by intellectual property rights. However, the Court of First Instance held that these five methods guaranteed only a minimal penetration of competitors to the market.

Secondly, Windows Media Player is preinstalled into the Windows 2000 - another abuse of dominance. Microsoft argue that if there were two PCs for the same price, one with a player and one without, no-one would buy the PC without a player. ECFI thinks that Microsoft violates the right of companies to forbid its staff to listen to music at work.

It would be wrong to describe Microsoft's appeal against the Commission's decision as absolutely useless. The Commission suggested that Microsoft had to pay salaries to experts of the Commission who would permanently control it.

Luxembourg Court: universal competence

What is really interesting is the fact the Luxembourg Court performed the role of a court of appeal after the exhaustion of the remedies available in the US legal system. In substance, this is a conflict between Microsoft and fellow American-based competitors Sun Microsystems (aka Stanford University Networks Microsystems, who earn about 14 billion dollars against Microsoft's 44 billion). Proceedings started in the US and ended with a settlement, but the competitors were not fully satisfied and this is why it has reached Europe.

The Commission described the relevant geographic market as 'the world.' In several passages of judgement, Microsoft is referred as a 'global power.' Judges take into consideration the negative effects of the violation outside the European economic area. In fact, this is an indirect but, nonetheless, real proclamation of the universal competence of the Luxembourg Court. In other words, the EU considers itself competent to punish a company for violations made in non-European markets.

And don't do it again

The final question is how the fine ended up being 497 million euros. The EU applied the principle of 'sufficient deterrent effect'; the Commission and the judges were of the opinion that the fine had to be higher than simply proportional to the damage, so that Microsoft would never even think of repeating the breach.

However, there are thousands of cases where the Commission and national governments violate European law vis-à-vis private individuals, corporations and other entities. In these cases, the European Courts never apply the principle of sufficient deterrent effect. Take for example the Bulgarian case of 'Nachova' on 26 February 2004. Kuncho Angelov and Kiril Petkov, two 21-year-old Bulgarians of Roma origin, were drunk and unable to resist when they were killed by a military policeman carrying an automatic rifle, who was trying to arrest them. The European Court of Human Rights awarded a mere 11, 000 euros compensation sum to the mother of the victim for pecuniary and non-pecuniary damage. This approach is also a permanent practice of the European Court of Justice.

When you compare 497 million euros and 11, 000, doesn’t it look like a Borat approach?