The Interaction between Antitrust and Intellectual Property : the Interoperability Issue in the Microsoft Europe Case

The present work analyzes the interaction between antitrust policy and intellectual property protection, with particular reference to the cases of refusal to supply, when it concerns ideas or inventions protected by an IP right. For this purpose, the paper preliminarily discusses the governing principles of antitrust policy on abuse of dominance and refusal to deal, as they have been implemented in the decisions of the EU Competition Authority, and it presents the specific issues related to the implementation of antitrust policy in the innovative industries. Then, the paper examines in particular the Microsoft Europe Case, as decided by the European Commission in 2004, focusing on the issue of the interoperability between the operating systems for personal computers and the operating systems for work group servers. The theoretical model, developed as an extension of the framework proposed by Choi and Stefanadis (2001) to the case of refusal to deal, suggests an explanation of the case, alternative to the one adopted by the Commission, if not necessarily in the final outcome of the decision, at least in the analytical arguments and in the dynamics of the market structure. In particular, we show that the refusal to supply the compatibility between the two complementary products was determined not only by the intention to leverage its dominant position to the adjacent market of server operating systems, but especially by the concern for keeping the monopoly on its core market, that is the one of PC operating system, given the future evolution of the software market, due to the diffusion of cloud computing.