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MEMO/04/305

Brussels, 22nd December 2004

Questions and answers – Order of the President of the Court of First Instance in case T-201/04 R, Microsoft Corp. vs European Commission, 22.12.04

What is the Commission’s reaction to the order of the President of the CFI?

The European Commission welcomes the order of the President of the Court of First Instance (CFI) because it means that the Commission’s March 2004 Decision (see IP/04/382) becomes effective immediately. Implementation of the Commission’s March decision will not only benefit consumers of computer products in terms of choice of media players on computers and choice of work group servers, but also stimulate innovation.

Today’s order is important because it preserves the effectiveness of antitrust enforcement, in particular in fast-moving markets as in this case. The order confirms, as the Commission claimed, that this type of case does not fulfil the criteria for a decision to be suspended.

What is the practical impact of this order?

The President of the CFI has rejected Microsoft’s application for suspension of the following remedies, imposed by the Commission Decision of 24 March 2004:

  • the obligation for Microsoft to offer an unbundled version of Windows, that is to say, a version of Windows that is fully-functional but without Windows Media Player (“WMP”); (“unbundling of WMP”)
  • the obligation for Microsoft to make available to its competitors certain technical interface information necessary to allow non-Microsoft work group servers to achieve full interoperability with Windows PCs; this having to be done on reasonable and non-discriminatory terms (the “interoperability remedy”).

As a result of the President of the CFI’s order, Microsoft must now implement both remedies without delay. Indeed, while the Decision gave Microsoft various deadlines to comply with the remedies (90 days for the unbundling of WMP, 120 days for the interoperability remedy), all these deadlines have now lapsed.

Does this order end the review of the Decision by the Court?

It is important to understand that there are two different cases before the CFI. The order issued on 22nd December 2004 is about Microsoft’s request for suspension of the Decision pending the Court’s judgment on its request for annulment of the Decision.

The order of the President of the CFI does not prejudge the Court’s judgment on the request for annulment, which has not been delivered yet. The question this order had to answer was mainly whether the Decision should be stayed to prevent serious and irreparable damage being caused to Microsoft or whether the public interest in implementation of the Decision outweighed such potential damage.

Is this order about the fine?

No. The € 497 million fine was not the subject of Microsoft’s request for suspension. The fine was already paid in full to the Commission on 29th June 2004.

If Microsoft appeals this order to the President of the European Court of Justice, will the implementation of the Decision be suspended again?

The Commission had, in deference to the CFI, suspended the Decision waiting for the order that has just come out.

The Commission is not aware of any precedent where the President of the ECJ has suspended the operation of a Commission Decision pending his own assessment of an order of the President of the CFI already rejecting the request for suspension. It is also not the Commission practice to suspend on its own motion the enforcement of a Decision in circumstances of this type, where the President of the CFI has already concluded that there is no need for suspension.

What will be the market impact of the unbundling of Windows Media Player?

The unbundling of WMP from Windows will make it possible for other media player vendors to convince computer manufacturers to install their media player technology in place of Microsoft’s WMP.

As a result WMP will no longer be guaranteed ubiquity – unless it succeeds on the merits. Software developers and content providers will no longer be artificially induced to using Microsoft’s media technology by default.

The remedy gives consumers and computer manufacturers a choice between taking Windows with WMP or with a different media player. It leaves it to the market to decide on the final outcome of the competitive process.

What will be the market impact of the interoperability remedy?

Information technology companies will have access on reasonable and non-discriminatory terms to certain technical information pertaining to how Windows personal computers “talk” to Windows work group servers (these are the computers which are used in corporate networks for users to manage access to shared files, printers, PC configuration and the like).

Without this information, it is impossible to sell work group servers in competition with Microsoft. Microsoft has in the past limited the disclosure of such information, with the result that competition risks being eliminated in the market for work group server operating systems.

The Decision puts a halt to this process of elimination of competition and restores the conditions for competition on the merits to unfold. Competing products will be chosen according to their own merits (e.g. in terms of security, stability, price) and Microsoft’s own offer will not be given an unbeatable advantage through privileged interoperability with Microsoft’s dominant product.

Will the interoperability remedy benefit the open source community?

The Commission does not favour one business-model over another. The interoperability remedy is intended to benefit all actual and potential vendors of work group server operating systems, whatever their business model. Furthermore, Microsoft has an obligation not to discriminate towards potential beneficiaries of the interoperability remedy.

Nevertheless, to the extent the interoperability information at stake or the use of it is covered by intellectual property rights in the European Economic Area, Microsoft must have the possibility to require a fair remuneration and set reasonable conditions so as to protect its legitimate interests.

What will happen now as regards the unbundling of WMP from Windows?

Microsoft has informed the Commission that it has already prepared a fully functional unbundled version of Windows, which should be available on the market in a few weeks.

What will happen now as regards the interoperability remedy?

Microsoft has informed the Commission that it will in the coming days set up a “work group server protocol program” through which it will make available the interoperability information identified by the Commission’s March 2004 Decision, and allow the use of it for the purpose of building compatible products.

The Commission also understands that Microsoft is taking measures to comply with its obligation to set up an “evaluation mechanism”. This mechanism will provide persons who can benefit from the remedy with the possibility of informing themselves about the scope and terms of use of the interoperability information in question.

Microsoft can impose reasonable and non-discriminatory conditions on the access to, and use of, the interoperability information. The Commission understands that Microsoft is setting up a Web page where the said conditions will be described in detail. The Commission has had preliminary contacts with Microsoft on that issue but cannot take at this stage a definitive position on whether the terms imposed are adequate.

The Commission Decision foresaw a “monitoring mechanism”. Is that already in place?

The Commission Decision required Microsoft to make proposals to the Commission for a monitoring mechanism. The Commission is discussing with Microsoft on the basis of a proposal sent to it by the company and hopes to quickly sort out the logistics of this monitoring.

How do you react to the suggestion that the Commission looks after the interests of competitors rather than consumers?

Such allegations are sometimes made by critics of the Commission but the very question demonstrates a failure to understand how markets operate. Competition benefits consumers in terms of choice of goods and services, availability of innovative products and price. Without competitors, there is no competition. End of story.


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