Developments in European Competition Policy: Impala and Microsoft
Tokyo, Japan
9 October 2007
Hosted By: the Fair Trade Institute
Dr. Mark Williams, Director at NERA in London and Brussels, spoke to an audience at the Fair Trade Institute, Tokyo on recent developments in European competition policy. Focusing his remarks on the European Court of First Instance (CFI) judgments in Impala (on the 2004 Sony/BMG merger clearance decision) and Microsoft (on the server interoperability and Media Player abuse case), Dr. Williams argued that both judgments pointed in the direction of tougher enforcement of merger control and competition policy by the European Commission.
In 2001, the European Commission suffered a series of reversals at the CFI, when the Commission's merger prohibitions in Airtours/First Choice, Schneider/Legrand, and Tetra Laval/Sidel were overturned, primarily on the basis that the economic reasoning and evidence were inadequate. This led to significant reforms at the European Commission, and arguably also led to less severe merger enforcement, compared to the late 1990s. The Impala judgment perhaps redressed the balance when the CFI accepted an appeal by Impala against the Commission's clearance decision in Sony/BMG, and forced the European Commission to re-examine the (by then completed) merger, which it subsequently cleared after very extensive investigation. Impala placed the Commission in the position whereby it faced a real risk of successful appeal not only if it prohibited a merger without adequate evidence, but also if it cleared a merger without having adequately taken into account objections to the merger. Given Impala's relevance to coordinated effects analysis, Dr. Williams also set out the evolution of the European Commission's policy on that theory of harm, to the point where the chief economist team now undertakes highly extensive data analysis to ascertain whether the market is prone to tacit collusion.
The Microsoft decision by the European Commission was issued in 2004, and set out that Microsoft had abused its dominant position, both by denying interoperability in the market for servers, and by tying its Media Player to the Windows operating system. This decision was appealed by Microsoft to the CFI. Against the backdrop of the Commission's ongoing Article 82 review, the CFI's almost complete support for the substance of the Commission's case signaled a period of potentially tougher practical enforcement of abuse of dominance policy.
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