18.7.2009

EN

Official Journal of the European Union

C 166/16

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Final report of the Hearing Officer in Case COMP/C-3/37.792 — Microsoft

(Pursuant to Articles 15 and 16 of Commission Decision (2001/462/EC, ECSC) of 23 May 2001 on the terms of reference of Hearing Officers in certain competition proceedings — OJ L 162, 19.6.2001, p. 21)

2009/C 166/07

The draft decision in this case gives rise to the following observations:

The Article 24(1) procedure based on the final decision of 24 March 2004

On 24 March 2004, the Commission adopted Decision 2007/53/EC relating to a proceeding pursuant to Article 82 (EC) and Article 54 of the EEA Agreement against Microsoft Corp. (Case COMP/C-3/37.792 — Microsoft, OJ L 32, 6.2.2007, p. 23).

In this decision (‘the Decision’), the Commission found, inter alia, that Microsoft had infringed Article 82 of the EC Treaty (‘Article 82’) and Article 54 of the EEA Agreement by refusing, from October 1998 until the date of the Decision, to disclose certain specified ‘Interoperability Information’ to vendors of work group server operating system products, so that they could develop and distribute such products (1).

On 10 November 2005, the Commission adopted a Decision pursuant to Article 24(1) of Regulation (EC) No 1/2003 (‘the Article 24(1) Decision’). Article 1 of this Decision orders that ‘Microsoft Corporation shall ensure that, by 15 December 2005, it fully complies with the obligations set out in Article 5(a) and (c) of the Decision. In the absence of such compliance, a periodic penalty payment of EUR 2 million per day, calculated from that date, shall be imposed on Microsoft Corporation.’

The Article 24(1) Decision identified two instances where Microsoft failed to comply with its obligations under Article 5(a) and (c) of the Decision. This proceeding relates exclusively to Microsoft’s obligation pursuant to Article 5(a) of the Decision to charge reasonable remuneration for access to or use of the Interoperability Information.

The Article 24(2) procedure based on the Article 24(1) Decision

On 12 July 2006, the Commission adopted a first decision pursuant to Article 24(2) of Regulation (EC) No 1/2003 (the ‘first Article 24(2) Decision’) fixing the definitive amount of the periodic penalty payment imposed by the Article 24(1) Decision for the period between 16 December 2005 and 20 June 2006 with respect to the first aspect of non-compliance identified in the Article 24(1) Decision, namely Microsoft's failure to provide complete and accurate technical documentation embodying the Interoperability Information, at EUR 280,5 million (2).

As stated in the first Article 24(2) Decision, the Commission retained the possibility of fixing a definitive amount of the periodic penalty payment for the second aspect of non-compliance preliminarily identified in the Article 24(1) Decision as from 16 December 2005, should the Commission conclude that Microsoft has failed to charge reasonable remuneration for access to or use of the Interoperability Information (3).

The present draft decision fixes the definitive amount of the periodic penalty payment to be levied on Microsoft for non-compliance with the obligation to charge reasonable remuneration for access to or use of the Interoperability Information.

Measures taken by Microsoft to comply with Article 5(a) and the Commission's reactions

Between 27 May 2004, when Microsoft submitted a first description of the measures it intended to take in order to comply with Article 5(a) to (c) of the Decision, until now, numerous exchanges between the Commission and Microsoft have taken place with regard to the reasonable remuneration aspect of the Decision.

In a letter of 29 October 2004, Microsoft stated that in its view, the description of the measures supplied in its letter of 27 May 2004 satisfied Microsoft’s obligation under Article 5(d) of the Decision. It also submitted two draft agreements that it intended to offer as part of a Work Group Server Protocol Program (‘the 2004 WSPP agreements’).

Subsequently, numerous exchanges took place during the remainder of 2004 and the first half of 2005, wherein the Commission asked (including by requests for information under Article 18 of Regulation (EC) No 1/2003) for further explanations and supporting documentation from Microsoft, to which Microsoft replied by submitting several reports, memoranda and revised versions of the 2004 WSPP agreements. The Commission also sent requests for information to third parties asking their views on the levels of remuneration proposed by Microsoft.

By decision of 28 July 2005, the Commission established a monitoring mechanism by providing for the appointment, functions and obligations of a Monitoring Trustee. The Trustee’s function is to assist the Commission in overseeing compliance with the Decision (4). On 5 October 2005, the Commission chose one person from a shortlist of four experts submitted by Microsoft, as Monitoring Trustee.

Between August and December 2005, Microsoft provided revised WSPP Agreements and various reports purporting to justify the remuneration levels charged in the WSPP Agreements.

On 7 April 2006, the Commission provided Microsoft with the Trustee’s review of the material purporting to justify the remuneration levels charged by Microsoft in the WSPP Agreements submitted on 15 December 2005 (‘the Trustee March 2006 Innovations report’).

As a result, from May through November 2006, Microsoft continued to make submissions in response to the Trustee March 2006 Innovations report, and also submitted revised WSPP agreements several times.

In February 2007, various reports were submitted to the Commission by the Trustee and by TAEUS, the Commission's external advisor. In the light of the reports submitted by the Trustee and TAEUS, the Commission came to the preliminary conclusion that Microsoft had not yet complied with its obligation to charge a reasonable remuneration for access to or use of the Interoperability Information pursuant to Article 5(a) of the Decision.

The Statement of Objections

On 1 March 2007, the Commission notified a Statement of Objections to Microsoft (‘the Statement of Objections’), and gave Microsoft five weeks to respond.

On 9 March 2007, Microsoft requested an extension to the deadline for its response to the Statement of Objections. I granted the request on 15 March 2007, extending the deadline until 23 April 2007. Microsoft responded on time.

Access to file

Microsoft requested access to the file on 2 March 2007, and this was granted on 5 March 2007, at the Commission’s premises.

On 27 April 2007, Microsoft submitted a corrigendum to its Response to the Statement of Objections. Microsoft requested further access to the file on 9 May 2007.

On 11 May 2007, TAEUS, the Trustee and his Advisors submitted reports on Microsoft’s experts’ report enclosed with the Response to the Statement of Objections, and Microsoft was given access to these, together with copies of all comments submitted by third parties on the Statement of Objections and on the Response to the Statement of Objections, on 14 May 2007.

On 16 May 2007, Microsoft requested further access to the file, which was granted on 23 May 2007.

On 21 May 2007, Microsoft submitted revised WSPP Agreements which included a Revised Royalty Table (‘the 21 May 2007 remuneration scheme’). Microsoft stated that it ‘will now officially roll out the lower rates’ with a retroactive date of application from the date of the adoption of the Decision.

On 1 June 2007, Microsoft submitted a supplemental response to the Statement of Objections, and a further technical assessment on 8 June 2007.

Several times during the procedure Microsoft requested access to correspondence between the Commission, on the one hand, and the Trustee or Commission experts, on the other hand.

The Commission considers that these documents are internal.

Already in the proceeding concerning the allegation that Microsoft had failed to provide complete and accurate technical documentation embodying the Interoperability Information, I did not accede to Microsoft’s request for access to the correspondence with the Monitoring Trustee and with external Commission's experts (cf. Final Report of the Hearing Officer in case COMP/C-3/37.792 — MICROSOFT, 3.7.2006, p. 6). I considered this correspondence to be internal.

However, I checked carefully whether access to the items of the correspondence could have been necessary for the adequate understanding of the methodology or the proper technical verification of the Trustee’s report or otherwise indispensable for Microsoft’s defence. In response to Microsoft's concerns, I verified the correspondence between the Trustee and TAEUS to the Commission between the relevant dates (10 November 2006 and 22 May 2007). I was able to confirm to Microsoft that in my view not one item of correspondence was indispensable for understanding the methodology applied in the report or for testing their technical correctness.

Furthermore, in response to a further issue raised by Microsoft, I verified the correspondence made available to me sent by the Commission to the Trustee and TAEUS (10 November 2006 to 27 July 2007). I confirmed to them after my review of the correspondence that there were no documents indicating that the Commission had exercised undue influence over the Trustee or the Commission experts.

THE ORAL HEARING

Microsoft did not request an oral hearing.

LETTER OF FACTS

The Commission sent a Letter of Facts (‘the Letter of Facts’) to Microsoft on 24 July 2007. This letter gave Microsoft the opportunity to comment on the Commission's assessment of the 21 May 2007 remuneration scheme and of other evidence which was gathered by the Commission after the adoption of the Statement of Objections, notably reports of the Trustee and the Commission's experts, TAEUS, as well as responses to requests for information to new WSPP licensees. Microsoft was given access to the file with regard to the documents filed after the adoption of Statement of Objections, and submitted its response to the Letter of Facts on 31 August 2007.

THE DECISION BY THE COURT OF FIRST INSTANCE

The Court of First Instance on 17 September 2007 upheld the substantive parts of the Decision, which Microsoft had appealed (5).

However, the Court annulled Article 7 of the Decision in so far as it orders Microsoft to submit a proposal for the establishment of a mechanism which is to include a monitoring trustee with the power to have access, independently of the Commission, to Microsoft’s assistance, information, documents, premises and employees and to the source code of the relevant Microsoft products.

On 2 October 2007, the Commission requested Microsoft to provide all documents and information Microsoft had provided to the Trustee or his team, independently of the Commission, from the date of the appointment of the Trustee. Microsoft responded to this request by letters of 31 October 2007 and 9 November 2007.

On 22 October 2007, following discussions with the Commission, Microsoft introduced a new remuneration scheme for the WSPP licences.

The provision of these documents and information and introduction of a new remuneration scheme did not mean that the investigation phase had been reopened, and so it was not necessary to issue a new Letter of Facts.

THE DRAFT FINAL DECISION

In my view, the draft final decision contains no elements of law that had not been set out in the Statement of Objections, and no elements of fact that had not been set out either in the Statement of Objections or in the Letter of Facts.

In the light of the above, I consider that the right to be heard of Microsoft and of the third parties has been respected in the present case.

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(1)  The Court of First Instance on 17 September 2007 upheld the substantive parts of the Decision, which Microsoft had appealed. Microsoft subsequently announced that it would not appeal the CFI's judgment.

(2)  Commission Decision of 12 July 2006 fixing the definitive amount of the periodic penalty payment imposed on Microsoft Corporation by Decision C(2005) 4420 final and amending that Decision as regards the amount of the periodic penalty payment (Case COMP/C-3/37.792 — Microsoft), C(2006) 3143 final.

(3)  Recital 244 of the Article 24(2) Decision.

(4)  Cf. Article 7 of the Decision and Article 3 of the Trustee Decision.

(5)  Supra, note 1.

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