Mandatory Contracting Remedies in the American and European Microsoft Cases

Interoperability and Competition Policy and Antitrust

Article Snapshot

Author(s)

William H. Page

Source

Antitrust Law Journal, Vol. 75, No. 3, ABA, 2009; conference paper from the Searle Symposium, “The End of the Microsoft Antitrust Case?”, Nov. 15-16, 2007

Summary

This paper compares the outcome of the Microsoft antitrust case in the United States with that in Europe.

Policy Relevance

Some remedies designed in the Microsoft antitrust case were unnecessarily wasted resources, or might harm innovation. Increases in competition after the case was decided largely came about because of market changes no one anticipated.

Main Points

  • Courts rarely require firms to rewrite contracts, because it requires the court to oversee complex business decisions, such as prices. In Europe and the United States, antitrust authorities required Microsoft to enter certain types of contracts with distributors.
    • Microsoft must let equipment distributors send out competing software. Many did.
    • Microsoft must let distributors install Windows without certain middleware or middleware icons, such as the Media Player. None did.

 

  • Courts should reject the idea that adding functions to a product hurts competition, so long as the addition does not add cost and/or physically exclude competing products.

 

  • In Europe and the United States, Microsoft must disclose and license technology to rivals to help them build competing products. In particular, this helps open source firms that will not pay license fees.
    •  Without convincing evidence they are needed, courts should avoid remedies targeting behavior that might be legal.
    •  Mandatory information-sharing remedies risk discouraging innovation by allowing cloning.

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