Market Power Abuse Is in the Eye of the Prosecutor

Wait a minute. Why have European courts concluded—again—that Microsoft has engaged in a pattern of anticompetitive practices while U.S. officials insist it has not?

The Justice Department's antitrust division, which won a court case against Microsoft but settled it on generous terms not long after President Bush took office, helpfully offers an explanation.

In it, Thomas O. Barnett, an assistant Attorney General, writes:

"In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors. In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously. U.S. courts recognize the potential benefits to consumers when a company, including a dominant company, makes unilateral business decisions, for example to add features to its popular products or license its intellectual property to rivals, or to refuse to do so."

Europeans, as he suggests, are not so forgiving. Europe's Court of First Instance ruled today that Microsoft had abused its dominant market position in software by bundling applications to its Windows operating system and by refusing to divulge information about Windows to rival developers of applications.

The court also upheld $690 million in fines against Microsoft.

While Microsoft had argued that the commission had erred, the court rejected the appeal, saying: "The court finds that the arguments put forward by Microsoft in the alternative are unfounded and, in particular, that Microsoft has not shown that the commission erred in assessing the gravity and duration of the infringement or in setting the amount of the fine."

No hard feelings in Washington, though.

"The Justice Department looks forward to continuing its wide-ranging and positive relationship with the EC on antitrust matters, including matters affected by today's decision," the Justice Department's Barnett wrote.

by Mark Stein