News Release
Mario Monti
No. 47/04
March 24, 2004
MICROSOFT: STATEMENT BY EU COMMISSIONER MARIO MONTI
In Brussels today, EU
Competition Commissioner
Mario Monti made the following statement in a press conference on EU Commission’s
decision in the Microsoft case.
“Ladies and gentlemen, I believe that you have already seen the
press release that presents our decision and will, therefore, limit myself
to explaining its rationale and making some considerations before taking your
questions.
“The Commission has taken a decision today which finds that
Microsoft has abused its virtual monopoly power over the PC desktop in Europe.
This is not a decision that we have taken easily or hastily. It’s a decision that
follows a five year investigation and intense debate within my department as well
as lengthy discussions with our legal and economic experts, consultation of the
15 EU member states and
my own colleagues and their services. The result is a decision which is proportionate
to the market abuses we identified and balanced in what it requires the company
to do to restore competition in the marketplace.
“We are asking Microsoft to disclose the information necessary to make sure
that competitors products can fully and properly ‘talk’ to Microsoft’s dominant
operating systems. We are also asking Microsoft to offer a version of its ubiquitous
Windows operating system without Windows media player. We are not expropriating
Microsoft’s intellectual property. We are also not breaking new legal ground neither
for Europe , nor indeed for the United States. We are simply ensuring that anyone
who develops new software has a fair opportunity to compete in the marketplace.
“We are saying that consumers and PC hardware manufacturers ought to be able
to decide which media player software they want to pre-install on their computers.
They ought to chose, not Microsoft. Our decision is about protecting consumer
choice and stimulating innovation.
“As I said, we did not rush into a decision. We sent no less than three statements
of objections to Microsoft. We carefully examined Microsoft’s responses and the
extensive data that we collected throughout the investigation. In the end we decided
to do what was best for innovation and the European consumers.
“Let me shortly describe the findings of our investigation and the legal and
economic reasoning behind our decision.
“Let me start with refusal to supply. A dominant undertaking’s refusal
to supply key inputs can stifle competition, be it the refusal to supply essential
raw materials or technological information.
“Let me be clear on one point. Under normal circumstances, no company in the
EU is forced to enter into a business relationship with third parties against
it choice. But a dominant company may sometimes be a gatekeeper and thus hold
the key to how a particular technology will develop. Under
EU antitrust jurisprudence a refusal to supply essential information can in
exceptional circumstances trigger a dominant companies’ duty to share information.
“The exceptional circumstances we have identified in the instance of Microsoft’s
refusal to supply are the following:
- Microsoft is dominant PC operating software and the interoperability
information that it refuses to supply makes it impossible for any competing software
to properly speak to the dominant desktop infrastructure;
- The refusal amounts to a disruption of previous levels
of supply because more interoperability information had been supplied for competitors’
products to ‘talk’ to previous version of ‘Windows’;
- The refusal risks eliminating competition in an adjacent
market, the work group server operating system market. These servers provide basic
services to office workers in their day-to-day work such as electronic filing,
access rights management and the sharing of printers.
“No viable alternative exists to obtaining the withheld interface information
from Microsoft. The ability to ‘talk’ to the dominant desktop is and remains vital
at this stage of the technological cycle. This situation has remained stable for
quite some time now – as borne out by our market enquiries.
“I come now to tying.
“Tying prohibited under Article 82 [of the EU Treaty] requires the presence
of the following elements:
- the undertaking concerned is dominant in the ‘tying product’
market – that is the dominant product which is used to force upon customers another
distinct product, the ‘tied’ product. Given a free choice, consumers would not
necessarily have opted for this ‘tied’ product;
- there is separate demand for the ‘tying’ and the ‘tied’
products;
- the undertaking precludes the consumers from having a free
choice as to the ‘tied’ product because it is already part of the dominant desktop
operating system;
- ‘tying’ harms competition, because a lot of high quality
alternatives to the ‘tied’ product are not readily available.
“Microsoft is dominant with Windows in the PC operating system—with approximately
95% of the share of global sales it holds a virtual monopoly. Second, PC operating
systems and media players are separate products. In fact there is separate consumer
demand for media players—a conclusion which is borne out by the fact that there
are a multitude of vendors who develop and supply media players on a stand-alone
basis. Third, PC manufacturers and consumers are not left a choice to obtain Windows
without WMP.
“Last but not least, there is foreclosure of competition. The advantage conferred
on WMP for being integrated into the dominant PC operating system induces content
providers and software developers alike to base their applications on the Windows
Media technology. As a consequence, customers are led to use WMP, since a wider
array of complementary software and content are available for that product. The
scenario is one of a snowball effect.
“I would like to stress that the Commission has not ruled that tying is illegal
per se, but rather developed a detailed analysis of the actual impact of Microsoft’s
behavior, and of the efficiencies that Microsoft alleges. In other words we did
what the US Court of Appeals suggested be done: we used the rule of reason although
we don’t call it like that in Europe.
“Dominant companies have a special responsibility to ensure that the way they
do business doesn't prevent competition on the merits and does not harm consumers
and innovation.
“Today’s decision restores the conditions for fair competition in the markets
concerned and will establish clear principles for the future conduct of a company
which provides the virtually unavoidable operating infrastructure for innovative
software applications.
“We believe that undistorted competition will bring about the best results
for consumer welfare as innovation will spring forth from many places – from Microsoft
itself and from its competitors.”
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Press Contacts:
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Anthony Gooch
202-862-9523
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Maeve O'Beirne
202-862-9549
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