A tale of two cases
Published: 24 Mar 2004 16:10 GMT
The European Union and the United States have worked for more than a decade to align their antitrust rules more closely. Businesses on both sides of the Atlantic say this is necessary to regulate mergers and other corporate actions in an increasingly global economy.
But concerns about Europe's perspective on antitrust issues arose in the United States in 2001, when the European Union rejected the merger of General Electric and Honeywell, which had been approved by federal authorities. The US Justice Department issued a press release at the time, bemoaning a "significant point of divergence".
Since then, however, European regulators have said any differences on antitrust issues are often exaggerated by commentators in the United States. In February, European Commissioner for Competition Policy, Mario Monti, took pains to make that point in a speech in Los Angeles.
"Put simply, the EU and US agree on what competition policy should be all about," he said, according to a posted copy of his speech. "We both agree that the ultimate purpose of our respective intervention in the marketplace should be to ensure that consumer welfare is not harmed."
US antitrust experts also point out that the European prosecution hasn't progressed as far as the Justice Department's case did.
Federal prosecutors under the Democratic Clinton administration originally brought a forceful case that asked for Microsoft to be broken in two, after US District Court judge Thomas Penfield Jackson ruled that the company had abused monopoly powers. Jackson approved the far-reaching penalty with little change.
"In the initial phase of Microsoft's US trial, the government came out with its case, and the judge came up with a harsh remedy," said Stanley Liebowitz, a University of Texas at Dallas economics professor who co-authored a 1999 book on Microsoft. "If that had remained as it was, I don't think the European Union would appear to be all that out of line."
The proposed US penalty was ultimately overturned by a federal court of appeals ruling, which also said Jackson had reasoned incorrectly on some key antitrust issues, though it agreed that Microsoft had illegally abused its monopoly. Monti's decision will face similar scrutiny from Europe's higher courts, which have previously blocked several of his rulings on mergers.
Critics conceded that the case had been weakened by the appeals court decision but said the pro-business philosophy of the new Republican White House played as large a role.
Rather than retry critical portions of the case after the appellate ruling, the Justice Department -- now under the Bush administration -- agreed to a settlement far more lenient than the initial court penalty. Microsoft did have to offer more information to its competitors, but it remained a whole company and was not required to make any substantial changes to its Windows operating system.
"In theory, the Democrats and Republicans were suing under the same standard," University of Baltimore's Lande said. But the Republicans, he added, "were very conservative enforcers who didn't believe in doing anything other than slapping Microsoft on the wrist: It's not corruption; it is just the way they view the world."
Political factors could help shape Monti's judgment too. The Justice Department has closely monitored the process, and some say pressure from the United States could help limit any eventual restrictions on Microsoft to the European market, instead of the entire world.
Yet above all, legal analysts say, the European regulators and their American counterparts were simply looking at different facts.
The US authorities were focusing on the Web browser market, stressing Microsoft's dealings with pioneering company Netscape Communications, whose business had been pummeled by the time the trial began. Monti is focusing on thriving companies such as RealNetworks and the media player market, which is still developing.
RealNetworks and Netscape do bear some striking parallels, particularly in their common status as scrappy underdogs against the Microsoft empire. But many details and evidence differ in their antitrust cases, ranging from the damning emails of the browser wars to the technical virtues of bundling browsers vs. multimedia players with operating systems.
"The Microsoft case is unique," Fenwick & West attorney Emmett Stanton said. "It's a combination of different facts, circumstances and focus."
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