A Colloquy on the CFI’s Judgment in Microsoft
This article examines Microsoft´s offense in withholding full information to its workgroup server operating systems rivals so that they could not interoperate with Microsoft´s systems as seamlessly as Microsoft could.
The Microsoft judgment was a big decision in the sense that it is long and concerns an important company. If it can be called a landmark decision, what sort of landmark is it?
Few judgments of the European Court of First Instance (CFI) have attracted as much attention or controversy as the decision in Microsoft Corporation v. European Commission. One aspect of the case dealt with Microsoft´s practice of bundling its own Windows Media Player application with its ubiquitous Windows operating system. The Court upheld a Commission decision that found Microsoft liable under Article 82 and, as a remedy, required Microsoft to produce and market an unbundled version of its operating system called Windows N. But Windows N has failed to sell in the marketplace, and the market position of competing media players has nonetheless grown.
In the tying part of the Microsoft case, as in the interoperability part of the case, the CFI upheld the Commission´s Decision. But it did so on grounds that were confused and inconsistent. For all of the central elements of the case, the CFI appears to have been unable or unwilling to set out a clear statement of principle and apply it properly to the facts.
From the Editor
A colloquy of articles on the European Court of First Instance (CFI) judgment in Microsoft Corporation v. European Commission (EC Microsoft) begins the Spring 2008 issue of Competition Policy International.
A Symposium on Consumer Protection
The Spring 2008 issue of Competition Policy International features four papers focusing on consumer protection policy. The papers by Armstrong, Beales, Rubin, and Tesauro & Russo present a tour of the logical basis for consumer protection policy and a review of the recent legal rules in the European Union and Italy.
This paper discusses complementarities and tensions between competition policies and consumer protection policies. The paper argues that markets will often supply adequate customer protection without the need for extra public intervention.
The foundation of consumer protection policy is respect for consumer choice. Modern consumer protection recognizes the need to preserve information markets and to carefully structure interventions to ensure compatibility with how consumers actually process information.
Deception is the manipulation of information to gain some advantage. This paper considers commercial deception through advertising. The paper first discusses the economics of information. The literature has derived four major policy conclusions. First, truthful information regarding price should not be restricted by regulatory authorities. Second, deception is most likely and most harmful for credence goods, and regulation is most useful (if it is useful at all) for these goods. Third, truthful information should never be restricted. Fourth, regulation of advertising is best done by authorities that specialize in advertising, rather than by agencies with another mission. A fifth, more tentative, conclusion is that regulation should limit itself to statements that are actually false, and ignore those that are misleading or deceptive.
Unfair Commercial Practices and Misleading and Comparative Advertising: An Analysis of the Harmonization of EU Legislation in View of the Italian Implementation of the Rules
Most antitrust experts tend to consider consumer protection the son of a lesser God in comparison to antitrust rules. Indeed, customer protection is the very essence of competition policy. A market that functions without distortions will benefit consumers capability to choose a larger variety of products at a cheaper price.
In the old game show, To Tell the Truth, panelists tried to convince the audience that they were the one associated with a particular story. They had to weave facts and details into the story to make it sound like the events had happened to them. The audience had to try to figure out which facts were likely to be consistent with the actual story. At the end, the host asked the real person associated with the story to stand up.
In the eye of the historian, published judicial decisions are badly incomplete accounts of the disputes they resolve. Some incompleteness stems from the nature of the judicial process.
In a recent review of Global Competition Law and Economics, a book I co-wrote with Damien Geradin, John Kallaugher raises some interesting questions about the very premises of the book. These questions seem worth addressing because they go well beyond an assessment of the book to raise fundamental pedagogical issues about the best approach to teaching competition law in the 21st century.
Introduction to Chapters VII and IX of Augustin Cournot, Researches into the Mathematical Principles of the Theory of Wealth
In November 2007, the European Commission accepted a set of guidelines concerning its review of non-horizontal mergers. The section on conglomerate mergers contains a discussion of the possibility that merging firms will bundle their products together. It reads, in part: “When producers of complementary goods are pricing independently, they will not take into account the positive effect of a drop in the price of their product on the sales of the other product. Depending on the market conditions, a merged firm may internalise this effect and may have a certain incentive to lower margins if this leads to higher overall profits (this incentive is often referred to as the Cournot effect).”
This article is a reprint of Chapters VII and IX of Augustin Cournot, Researches into the Mathematical
Principles of the Theory of Wealth (N.T. Bacon trans.) (New York: Augustus M. Kelley, 1971) (1838).