The European Commission and Microsoft

THE EUROPEAN COMMISSION AND MICROSOFT

Mr. ALLEN. Mr. President, I rise to address the European Commission's antitrust action against Microsoft. It is my understanding that antitrust authorities for the European Union member nations have given European Competition Commissioner Mario Monti their unanimous backing for a formal commission finding that Microsoft abused its market share of its Windows operating system for personal computers to leverage its way into related markets for networking and multimedia software. It is expected that the European Commission will hand down a formal decision finding that Microsoft is in violation of European Union antitrust laws.

By imposing harsh, unprecedented penalties upon Microsoft, the Commission has extended its view of competition and regulation beyond Europe and onto the United States-to the detriment of U.S. laws, industry and consumers.

For many years, the European Union and its member states have criticized the United States for adopting laws and regulations that, in the view of European policymakers, have had an extraterritorial reach. The European Commission in particular has consistently urged the United States to ensure that its legal determinations do not intrude into European affairs. We now have a clear example of the European Union not practicing what they preach.

If the Commission rules that Microsoft is in violation of European Union antitrust laws, it will undercut the settlement that was so carefully and painstakingly crafted with Microsoft by the U.S. Department of Justice and several state antitrust authorities. There can be no question that the U.S. Government was entitled to take the lead in this matter-Microsoft is a U.S. company, many if not all of the complaining companies in the EU case are American, and all of the relevant design decisions took place here. I would hope that if the Commission were cognizant of America's legitimate interests in this matter, it would act in a manner that complemented the U.S. settlement. I fear the Commission has selected a path that places its resolution of this case in direct conflict with ours.

This is not the only example of the Commission's overreaching in this case. In recent negotiations with Microsoft, the European Commission demanded that Microsoft agree to ensure that computer manufacturers who sell pre-installed versions of Windows also install three competing media players-an obligation that the Commission insisted on imposing not just within the EU, but globally. In spite of its objections to these requirements, Microsoft agreed to the Commission's approach in order to reach a settlement. I understand the Commission proposes to impose a fine of over $610 million on Microsoft-higher than any fine in the Commission's history. It has been suggested that the amount of this fine was based not only on Microsoft's conduct in the EU, but in the United States and elsewhere as well. One can only conclude that the Commission was not satisfied with how U.S. antitrust authorities and courts resolved the case against Microsoft, and therefore decided to act as a kind of supra-national competition authority by fining Microsoft for its conduct worldwide.

The Commission's proposed ruling, as well as its negotiation tactics, is unprecedented in its scope. By proposing to fine Microsoft for purported anticompetitive conduct and injuries in the United States, the European Commission is directly challenging the adequacy of the United States' own antitrust laws, including the settlement that Microsoft and U.S. authorities reached in the U.S. proceedings. In fact, the obligations proposed to be imposed on Microsoft by the
Commission are precisely the type that the U.S. District Court and the U.S. Department of Justice rejected as undermining consumer welfare.

It is incumbent on the Departments of State and Justice to stand up not only for an important American company but more importantly for legitimate U.S. jurisdiction over alleged anticompetitive behavior in the United States. The U.S. and the EU are signatories to a 1991 comity agreement on antitrust issues which requires that one government defer to the other if the principal issues being investigated involve companies of one of the parties. Here, the EU is investigating a U.S. company based on complaints from other U.S. companies. If the U.S. Government does not make a clear and strong statement objecting to the EU's extraterritorial approach, we will lose influence and credibility for years to come to the detriment of all U.S. industry, as well as to U.S. consumers.