On 16 December 2009, the European Commission announced that it had adopted a decision making legally binding the commitments offered by Microsoft to address the Commission’s concerns that Microsoft had tied its web browser, Internet Explorer, to the Windows PC operating system. Microsoft has also given informal undertakings to disclose interoperability information, in relation to a second case being investigated by the Commission.
On 14 January 2008, the Commission announced that it had opened two separate investigations into allegations that Microsoft had abused a dominant position, contrary to Article 102 TFEU. The first case concerned a complaint made by Opera, a web browser vendor, which alleged that Microsoft had tied Internet Explorer to its Windows PC operating system. The second case concerned a complaint made by the European Committee for Interoperable Systems (ECIS), that Microsoft had illegally withheld interoperability information in respect of a range of its products. The Commission issued a statement of objections in relation to the first case on 14 January 2009, in which it provisionally concluded that Microsoft may have infringed Article 102 by abusing its dominant position on the PC operating systems market through the tying of Internet Explorer to Windows.
In March 2004, the Commission imposed a fine of €497 million on Microsoft for abuse of a dominant position, through the leveraging of its “near monopoly” in the PC operating systems market onto the markets for work group server operating systems and media players. In September 2007, the Commission’s infringement decision was essentially upheld by the General Court. In February 2008, the Commission imposed a penalty of €899 million on Microsoft for non-compliance with the 2004 decision.
If the Commission finds that there has been an infringement of Articles 101 or 102 TFEU, it may under Article 7 of Regulation 1/2003 impose “any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end”. Under Article 9 of Regulation 1/2003, where the Commission intends to adopt a decision requiring an infringement to be terminated, the undertaking(s) concerned may offer commitments to meet the Commission’s concerns. Such commitments are made legally binding by a “commitment decision” of the Commission, which also states that there are no longer grounds for action by the Commission. If the company concerned breaches the commitments, under Article 23(2)(c) of Regulation 1/2003 the Commission may impose a fine of up to 10% of that company’s turnover, without needing to demonstrate an infringement of Article 102.
Commitments – tying
The Commission’s preliminary view in the first case, as set out in its statement of objections, was that Microsoft’s tying of Internet Explorer to Windows was liable to foreclose the market for web browsers and also gave Microsoft an “artificial distribution advantage not related to the merits of its product”. The Commission also considered that Microsoft’s behaviour had restricted innovation in the market and led to products and websites being designed primarily for Internet Explorer.
The Commission’s commitment decision makes the commitments offered by Microsoft legally binding. The main aspects of the commitments are:
- Users of Windows XP, Windows Vista and Windows 7 will be offered a choice of different web browsers, which may be installed on their PC in addition to or instead of Internet Explorer, by means of a “choice screen”. The choice screen will contain details of the twelve most popular browsers that run on Windows.
- Original equipment manufacturers (OEMs) will be free to pre-install a browser or browsers of their choice, and will no longer be contractually obliged to install Internet Explorer.
- End users and OEMs will be able to turn Internet Explorer off in Windows 7 and subsequent versions of Windows.
Microsoft must make the choice screen update available to users by mid-March 2010. Microsoft will report to the Commission on a regular basis and the commitments may be reviewed on request by either Microsoft or the Commission after two years. The commitments are for a term of five years from the date of the Commission’s commitment decision.
Commitments – interoperability
Following discussions with the Commission in relation to the second case, Microsoft has published a public undertaking to disclose interoperability information relating to Microsoft products such as Windows, Windows Server, Office, Exchange and SharePoint. This information will improve interoperability between those products and third party products. The undertaking has been described as “informal” as far as the Commission is concerned (i.e. it has not been made legally binding under Article 9 and does not conclude the Commission’s investigation into interoperability). However, Microsoft’s compliance with the undertaking may be enforced by third parties either in the courts or through arbitration. The undertaking may be terminated by Microsoft on one year’s notice, but at the earliest ten years after its entry into force.
The Commission has demonstrated in 2009 that it is increasingly prepared to settle abuse of dominance cases by way of commitments as it has done here for the tying case. Although the interoperability undertaking given by Microsoft does not formally end the Commission’s investigation, it seems unlikely that the Commission would dedicate significant further resources to its investigation unless the undertakings do not have the desired effect on competition in the market.
The Commission considers that the web browser commitments (to prevent tying) will provide competitors with an effective opportunity to compete on the merits with Internet Explorer and will enhance competition in the market for web browsers. However, it remains to be seen whether the choice screen will in fact encourage consumers to switch away from Internet Explorer and lead to more widespread use of web browsers which run on multiple operating systems platforms, or whether Microsoft’s Internet Explorer will continue to be “the world’s most popular browser”.
Source: Commission press release and commitment decision, 16 December 2009