The Challenges of IP Protection and Competition Enforcement: An Analysis of the Microsoft Decisions (US and EU) and Their Implications for South African IP and Competition Law: Lex Informatica Conference, 21st-23rd May 2008 Pretoria, South Africa

Article excerpt

1. Introduction

Microsoft Corporation's (Microsoft) pervasive influence in contemporary life, especially in the software industry, is beyond question. (1) A great majority of the papers presented at this conference were produced through various Microsoft software products. Those who had the occasion to undertake Internet research most likely used Internet Explorer which came as part of the operating system bought with their computers. Indeed, many attending this conference may be forgiven for thinking that only Microsoft operating systems and programmes are readily available for use in the business world today. This is far from the truth.

As a result of this growth in influence and importance, software developers have sought to protect their control over their products. In this connection, protection is achieved through a variety of means, including intellectual property law (patents and copyrights). As a measure of control, software developers preclude those who purchase their software either as Original Equipment Manufacturers (OEMs), direct consumers or competitors from reverse engineering the software. Even in terms of use, those who purchase software only acquire the licence to use the software, which comes with a plethora of limitations on the way in which the software could be used. Importantly, software developers are particularly careful to shield the details of their creations from competitors or potential competitors.

The enforcement actions taken by the anti-trust agencies in the United States of America (US) and the European Union (EU) in the last few years underscore Microsoft's influence over the software industry and the quest by the aforementioned agencies to preserve and/or maintain competition. What is, however, intriguing is that the Anti-trust Division of the Department of Justice in the US and the European Competition Commission (EC) in the European Union (EU) took divergent decisions in relation to essentially the same competition issues that arose in their respective jurisdictions, especially in respect of the remedies that were prescribed. The question is whether these differences flowed from mere jurisdictional approaches to these matters, or on the contrary, reflected deep seated ideological differences.

Given the stature and influence of both institutions in competition enforcement generally, and their influence over the enforcement approaches and policies of emerging markets such as South Africa, the question that arises is which enforcement policies are more suitable for South Africa. (2) The answer to this question will not only be dictated by the policy choices that South Africa may want to make, but are likely to be strongly influenced by the structure of the South African Competition Act itself. (3) Further, a number of regional developments could find South Africa looking to Europe for guidance on these matters.

April 2008 saw the inauguration of a regional competition authority in Africa, the COMESA Competition Commission. Although South Africa is not a member of COMESA, there is no doubt that its regulatory oversight will have a profound influence on South African companies doing business in Africa as well as on the South African Competition Commission. (4) More importantly, COMESA's competition regime draws heavily from the EC model. For this reason, it must be expected that its enforcement policies, especially around IP and Competition issues are likely to be influenced by EC jurisprudence.

At a national level, South Africa has always had competition regulation from as early as 1955. However, the last piece of legislation that is probably most familiar to some is the Maintenance and Promotion of Competition Act of 1979. This is the legislation that was replaced by the current Competition Act, No. 89 of 1998. The review of the South African competition regime came at a time when the whole SADC region was adorning itself with competition legislation. …