The CFI in Microsoft - Consumer Welfare, Network Externalities & the Goal of Competition Policy

Abstract: This essay aims at interpreting the legal standards of consumer benefits in the CFI judgment Microsoft v Commission with regard to refusal to supply interoperability information and tying of Windows Media Player. In the refusal to supply part of the thesis it concludes that the Commission’s findings are sound and that Microsoft’s behavior had a negative effect on consumer welfare. However, the new incentives-balancing-test provides a lot of legal uncertainty for dominant undertakings which ultimately can discourage dominant companies from investing in R&D which would prejudice consumers in the long run. In the tying part the essay concludes that the CFI has successfully applied the standards from previous case-law on Microsoft. However, in this part I argue that the CFI has failed to correctly analyze the market with regard to network externalities and the speed of development. This analysis shines a whole new light on the case and concludes that the tying practice was not to prejudice of consumers.