General Court Issues Judgment On Microsoft Compliance Case

 
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On 27 June 2012, the General Court issued its judgment on an appeal by Microsoft against the Commission's imposition of a periodic penalty payment of €899 million for its failure to apply "reasonable and non-discriminatory" rates for interoperability information.

The Court concluded, first, that Microsoft was in a position to assess whether the royalty rates it was proposing to apply were reasonable for the purposes of the 2004 decision without further guidance from the Commission. In this respect, the Court concluded that pricing principles agreed by Microsoft and the staff at Commission's Directorate-General for Competition ("DG Competition") at an early stage had provided the company with sufficient guidance. Although the Court acknowledged that Microsoft correctly noted that the requirement to impose "reasonable" rates was subject to multiple possible outcomes, the Court reasoned that this "finding confirms the merits of the Commission's argument that it is not for it to choose a particular rate of remuneration from among what are reasonable rates". The Court did not accept Microsoft's argument that Microsoft was in fact not free to choose rates above the limit the Commission would ultimately deem acceptable, and that the use of a periodic penalty payment to coerce compliance with an obligation that could be interpreted in different ways placed it in the "intolerable position" described by Advocate General Warner in the Commercial Solvents case.

Second, the Court rejected Microsoft's arguments that, in the absence of Commission guidance on what rates it could charge, it implemented reasonable rates. In this respect, Microsoft argued that it fixed its rates below those deemed reasonable by Price Waterhouse Coopers, that it established with the cooperation of DG Competition an arbitration mechanism to resolve any possible disputes that licensees would have regarding its rates, and that it pointed out that all prospective licensees that approached it for a licence accepted its terms without regard to the arbitration mechanism. The Court accepted the Commission's arguments without qualification, concluding that such measures were an insufficient alternative to...

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