Friday, March 16, 2012

Cisco brings Microsoft/Skype merger to court

By Till Patrik Holterhus, MLE.

As covered earlier on the Berkeley Global Antitrust Blog on October 7th, 2011 the European Commission cleared Microsoft’s acquisition of Skype, determining that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part therein.

On February 15th, 2012 this issue took a new and interesting turn. The technology giant Cisco brought an action against the European Commission’s decision in front of the General Court (formerly the Court of First Instance), pointing out that the European Commission’s decisions violates their freedom of competition by not adequately taking into account all the anti competitive effects of the planned merger and asking the Court to annul the decision.

Although Cisco doesn’t oppose the merger completely, it says the European Commission should at least have placed certain conditions on the merger that would have ensured that the market remains open and gives competitors a fair chance to participate in the future of video communications.

The action of a third party against a merger is a complex issue of law. While the court will have to consider the market participants’ freedom of competition, it also has to take into account the economic property rights of the merging parties and respect the European Commission’s discretion in the field of complex economic assessments.

The General Courts last decision overruling a clearance decision in a merger case – confirmed by the European Court of Justice – was in 2006 (Sony/BMG “Impala”).

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