Monday, September 17, 2007

Lessons from the CFI Decision

Posted by Bill Page

So far, there is little to report of interest other than the result—an endorsement of the commission’s position on every substantive issue. The court’s pattern appears to be, on each point, to repeat the Commission’s 2004 decision, describe the position of the parties in great detail, and then to endorse the Commission’s position. The court emphasizes (¶ 260) that it can only evaluate the 2004 decision based on the “the matters of fact and of law existing at the time when the measure was adopted.” Consequently, the court cannot take account of what we have learned during the commission’s implementation of its decision—the fact, for example, that the version of Windows without Media Player that Microsoft created in response to the 2004 decision has found no market at all. The net effect is that, in my reading so far, this decision teaches us little that we did not know after reading the commission’s decision in 2004, other than that the court now agrees with the commission on just about everything, except the requirement of a monitoring trustee. And all thirteen members of the court apparently agree in every detail.

Thus, the lesson is that EC competition law has now adopted a significantly different position than that of  US law on tying and on the obligation of a dominant firm to assist rivals. On that subject, I also noticed this in the New York Times coverage of Neelie Kroes's press conference earlier today:

[Kroes] highlighted the fact that Microsoft has 95 percent of the world market for desktop operating systems and said she would like to see this fall.

“You can’t draw a line and say exactly 50 percent is correct, but a significant drop in market share is what we would like to see,” she said. “Microsoft cannot regulate the market by imposing its products and its services on people.”

Update: The EC has issued a "clarification" of Kroes's remarks.  It seems she didn't really mean to say that the EC wants Microsoft's market share to fall, only that, if its abusive practices are removed, the "logical consequence" would be that its market share would fall.

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The New York Times reports that the ruling may bode ill for other companies: Software and legal experts said the European ruling might signal problems for companies like Apple, Intel and Qualcomm, whose market dominance in online music downloads... [Read More]

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