Case COMP/C-3/37.792 Microsoft)
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EN EN EN COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 21.4.2004 C(2004)900 final COMMISSION DECISION of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 Microsoft) (ONLY THE ENGLISH TEXT IS AUTHENTIC) (Text with EEA relevance) EN EN COMMISSION DECISION of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 Microsoft) (ONLY THE ENGLISH TEXT IS AUTHENTIC) (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty1, and in particular Article 3 and Article 15(2) thereof, Having regard to the complaint lodged by Sun Microsystems, Inc. on 10 December 1998, alleging infringements of Article 82 of the Treaty by Microsoft and requesting the Commission to put an end to those infringements, Having regard to the Commission decision of 1 August 2000 to initiate proceedings in Case IV/C-3/37.345, Having regard to the Commission decision of 29 August 2001 to initiate proceedings in this case, and to join the findings in Case IV/C-3/37.345 to the procedure followed under this case, Having given the undertaking concerned the opportunity to make known their views on the objections raised by the Commission pursuant to Article 19(1) of Regulation No 17 and Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles 85 and 86 of the EC Treaty2, Having regard to the final report of the hearing officer in this case, After consulting the Advisory Committee on Restrictive Practices and Dominant Positions, 1 OJ 13, 21.2.1962, p. 204/62. Regulation as last amended by Regulation (EC) No 1216/1999 (OJ L148, 15.6.1999, p.5). 2 OJ L 354, 30.12.1998, p. 18. 2 Whereas: 3 1 PARTIES TO THE PROCEEDINGS 1.1 Microsoft Corporation (1) Microsoft Corporation (“Microsoft”), a company based in Redmond, state of Washington, USA, manufactures, licenses and supports a wide variety of software3 products for many computing devices.4 Its turnover for the fiscal year July 2002 to June 2003 was USD 32,187 million5 (EUR 30,701 million6) on which it earned net profits of USD 13,217 million7 (EUR 12,607 million). Microsoft employs 55,000 people around the world. Microsoft Europe Middle East & Africa controls its activities in the European Economic Area (“EEA”) from Paris La Défense. Microsoft is present in all countries within the EEA. 1.2 The complainant: Sun Microsystems, Inc. (2) Sun Microsystems Inc. (“Sun”), a company based in Palo Alto, California, USA, provides network computing infrastructure solutions that comprise computer systems (hardware and software), network storage systems (hardware and software), support services and professional and educational services.8 Its turnover for the fiscal year July 2002 to June 2003 was USD 11,434 million (EUR 10,906 million9) on which it suffered a net loss of USD 2,378 million10 (EUR 2,268 million). Sun employs some 36,100 people around the world. Sun is present in all countries within the EEA. 3 For a definition of computer terms such as software and hardware, PC, etc. see below at recitals (21) et seq. 4 Microsoft’s Annual Report for US fiscal year ending June 2002, on page 1. See http://www.microsoft.com/msft/sec/FY02/10k2002.htm, printed on 24 January 2003. 5 Microsoft’s Form 10-K Annual Report for the US fiscal year ending June 30, 2003, page 9. See http://www.sec.gov/Archives/edgar/data/789019/000119312503045632/d10k.htm, printed on 18 November 2003. 6 The exchange rate used for the year July 1, 2002-June 30, 2003 is EUR 1 = USD 1.0484. This is the average of the average quarterly exchange rates for the third and fourth quarters of 2002, and the first and second quarters of 2003 (0.9838, 0.9994, 1.0731, 1.1372). Source: Eurostat. 7 Microsoft’s Annual Report for US fiscal year ending June 2002, on page 11. See http://www.microsoft.com/msft/sec/FY02/10k2002.htm, printed on 24 January 2003. 8 Sun’s Form 10-K Annual Report for the US fiscal year ending June 30, 2003, on page 1. See http://www.sun.com/aboutsun/investor/annual_reports/sun_10k03.pdf, printed on 24 January 2003. 9 The exchange rate used for the year July 1, 2002-June 30, 2003 is EUR 1 = USD 1.0484. See footnote 8. 10 See Sun press release outlining annual results for US fiscal year ending June 2003, http://www.sun.com/smi/Press/sunflash/2003-07/sunflash.20030722.1.html, issued on 22 July 2003, printed on 18 November 2003. 4 2 CHRONOLOGY OF THE PROCEDURE AND BACKGROUND 2.1 The procedure (3) On 10 December 1998, Sun made an application to the Commission pursuant to Article 3 of Regulation No 17 for the initiation of proceedings against Microsoft (“Sun’s Complaint”). Sun alleged that Microsoft enjoyed a dominant position as a supplier of a certain type of software product called operating systems for personal computers (“PC operating systems”). Sun further contended that Microsoft infringed Article 82 of the Treaty by reserving to itself information that certain software products for network computing, called work group server operating systems, need to interoperate fully with Microsoft’s PC operating systems. According to Sun, the withheld interoperability information is necessary to viably compete as a work group server operating system supplier. (4) The case opened pursuant to Sun’s complaint was registered as Case IV/C-3/37.345. After a first investigation of the complaint, the Commission, on 1 August 2000, sent a Statement of Objections (“the first Statement of Objections”) to Microsoft to give Microsoft opportunity to comment on its preliminary findings of facts and law. The Statement of Objections focussed on the interoperability issues that formed the basis of Sun’s complaint. Microsoft responded to the Statement of Objections on 17 November 2000.11 (5) In the interim (February 2000), the Commission had launched an investigation into Microsoft’s conduct on its own initiative, under Regulation No 17, which was registered as Case COMP/C-3/37.792. The investigation carried out under that case concerned more specifically Microsoft’s “Windows 2000” generation of PC and work group server operating systems and Microsoft’s incorporation of a software product called “Windows Media Player” into its PC operating system products. On 30 August 2001, that investigation resulted in the sending of a second Statement of Objections (“the second Statement of Objections”) to Microsoft. The second Statement of Objections concerned issues of interoperability as well as the incorporation of Windows Media Player in Windows. The Commission, by virtue of the second Statement of Objections, joined the relevant findings set out in the first Statement of Objections to the procedure followed under Case COMP/C-3/37.792.12 On 16 November 2001, Microsoft responded to the second Statement of Objections. 11 This response, as was the case with Microsoft’s subsequent responses, included submissions by Microsoft’s economic consultant, NERA. 12 For the documents initially collected under Case IV/C-3/37.345, the page numbering in the original file and the original case number have been indicated (although the relevant evidence has been joined to Case COMP/C-3/37.792). 5 (6) In its responses to both the first and second Statements of Objections, Microsoft submitted several statements from customers (enterprises and administrations) and system integrators (“Microsoft customer statements”), purportedly supporting its responses to the Commission’s objections concerning interoperability.13 Altogether, 46 such Microsoft customer statements were submitted.14 (7) In February and March 2002, the Commission sent a round of requests for information to those 46 customers, with a view to obtaining quantitative data on those customers’ use of products relevant to the Commission’s investigation. (8) From April to June 2003, the Commission engaged in a wider market enquiry (“the 2003 market enquiry”). For interoperability, on the basis of an independent sample of organisations that use PC and work group server operating systems, a first set of requests for information was sent on 16 April 2003 to 75 companies, all based in the EEA.15 Those companies, which were selected at random, are from a number of different activity sectors16 and of different sizes. Some of the 71 companies which responded provided answers for their sub-entities/subsidiaries or for sister-companies in the same group, so the total number of responses was in fact over 100, covering more than 1.2 million client PCs (desktops and laptops).17 The replies to the questionnaire generated additional queries, and a follow-up questionnaire was therefore sent on 28 May 2003 and on 4 June 2003 to the 62 organisations that at those points in time had already responded to the requests for information of 16 April 2003.18 (9) In parallel, 46 requests for information were sent on 16 April 2003 to companies active in areas relevant to the issues raised by the incorporation of Windows Media 13 The statements were drafted by Microsoft’s lawyers on the basis of notes taken during conversations with the customers’ IT managers and then sent to these IT managers for review and signature. See Microsoft's submission of 16 November 2001 at paragraph 37. 14 34 such statements were submitted in Microsoft’s response to the Commission’s First Statement of Objections (submissions dated 17 November 2000 and 15 March 2001) and 13 additional customer statements in its response to the Commission’s Second Statement of Objections (submission dated 16 November 2001).