As the flurry of news reporting on last Monday’s Microsoft judgment in the Court of First Instance gives way to considered analysis, commentators will be noting the words of Thomas Barnett, the US Assistant Attorney-General for Antitrust.

It comes as no surprise that Barnett – someone familiar with the repercussions of the earlier Microsoft litigation in the US as well as the context of the difficult issues raised by the European Commission’s case against Microsoft – claims that it will be “some time before the full impact of today’s decision on antitrust policy in Europe will be apparent”.

That ruling is likely to be an important milestone in the evolution of competition law within Europe, and potentially beyond – not least for its potential impact on the business strategies of dominant companies.

But it is clear from the judment of the Court of the First Instance that the European Commission won on the main issues at Microsoft’s expense and that the CFI was left unmoved by Microsoft’s arguments. The only gloss is that the CFI held that the commission had exceeded its discretion by granting excessive powers to the monitoring trustee and by requiring Microsoft to pay for the trustee.

In terms of next steps, either the commission or Microsoft can appeal within two months to the European Court of Justice (ECJ) on points of law only. This will reduce significantly the number of issues that Microsoft could take before the ECJ, given that in its judgment the CFI has made extensive findings of fact on issues such as the extent to which elements of Microsoft’s software need to be disclosed to third-party IT developers (inter-operability) and the impact on third-party innovation of requiring Microsoft to make available a version of Microsoft Windows that does not include its Media Player (unbundling).

If any appeal is brought, then the uncertainty could continue for some time; in a recent case involving BA, more than three years elapsed between the CFI and ECJ judgments.

So will there be an appeal? Any decision is multifaceted. Microsoft and its advisers need to evaluate the likelihood of a successful appeal against the time, management effort and costs involved in appealing to the ECJ.

The size of the fine (€497 million), the commercial consequences of having to live with the commission’s decision (albeit without a commission-appointed independent monitoring trustee with powers to scrutinise closely how Microsoft carries on business) and the potential benefits of moving to a more neutral relationship with the commission will all be relevant considerations on whether to appeal. So, too, will be the real threat of follow-on damages’ actions brought by adversely affected third parties, relying both on the commission’s decision and the CFI’s judgment as conclusive evidence of Microsoft’s anticompetitive behaviour. Microsoft could decide reluctantly not to appeal, not least because the ECJ might adopt an even more unhelpful judgment.

The judgment raises several key issues: for example, as each of the “big” abuse cases (Magill, IMS, Bronner, etc) has emerged from the courts in Luxembourg, there is usually a discussion about the extent to which the judgments are of general application beyond the specific facts of the case.

Microsoft will be no different, but the facts here are unusual and there is a real risk that national competition authorities or courts in the European Union adopt a “blender” approach. In other words, different concepts are taken from different cases, but without acknowledging the relevant factual background, and then mixed together to justify adopting an infringement decision that takes competition law into new, unpredictable and unjustifiable directions. That outcome would be bad for business and lawyers – and ultimately bad also for the authorities.

Competition authorities have faced accusations of soft-pedalling over allegations of abuse pending this judgment. But the court’s general endorsement of the commission’s methodology is likely to encourage it and other national authorities to pursue further prominent challenging abuse cases in the future. Will it, though, do anything to unblock the logjam surrounding the draft guidance paper on unlawful exclusionary abuses that the commission issued in December 2005 but which has still been neither adopted nor definitely abandoned?

A more philosophical issue is whether competition policy in the EU pays more attention to the interests of competitors rather than protecting consumers by safeguarding competition. Cases such as Microsoft reignite the debate. After all, the case arose from a competitor complaint and the CFI’s judgment analyses at length the impact of Microsoft’s commercial practices on intermediate customers (the OEMs) and Microsoft’s competitors, but is enough attention paid by courts and competition authorities in the EU to understand and take account of what is in the best interests of end-consumers?

In a similar vein, in its judgment the CFI discussed at length what degree of access to Microsoft’s software was needed for competitors to be able to remain viably on the market, but the assessment inevitably involves making assumptions about competitors’ relative efficiency and effectiveness. Yet are such assumptions really discussed in a sufficiently open and detailed way as part of the competition enforcement process?

The case merits a careful reading and Microsoft’s reaction is awaited with interest. It is, however, certain that the case will be a significant milestone in the development of competition law. It is an important case that the management of companies with large market shares will need to take into account when devising and implementing their commercial strategies. The author is national head of the European Union and competition group at Pinsent Masons

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