Free Market vs. Bureaucracy; European Antitrust Laws Hurt Businesses

The Washington Times (Washington, DC), January 11, 2005 | Go to article overview

Free Market vs. Bureaucracy; European Antitrust Laws Hurt Businesses


Byline: C. Boyden Gray, SPECIAL TO THE WASHINGTON TIMES

In its recent decision, Europe's Court of First Instance in Luxembourg refused to suspend the sanctions placed on Microsoft by European Commission competition authorities. Microsoft will proceed with its appeal against the regulators, but the company must immediately comply with the excessive sanctions imposed by the Europeans. Even if Europe's antitrust regulators eventually lose their case, which could last several years, the marketplace damage will already have been done by the sanctions.

The European courts and regulators still have not learned that they need to proceed cautiously in imposing overly intrusive government regulations.

In September, this same court ruled that European regulators erred in June 2000 by blocking the MCI/WorldCom bid to purchase Sprint. But the ruling came four years too late for MCI, which long ago abandoned its pursuit of Sprint in the face of regulatory pressure. The results of the MCI decision should have demonstrated the problem with applying regulatory remedies prematurely. Unfortunately for consumers and the technology marketplace, this lesson has fallen on deaf ears.

The heavy-handed ruling of the European antitrust authorities cost Microsoft more than $600 million, a record fine for antitrust violations. But even worse, European regulators have ordered Microsoft to reveal valuable software code information to rivals and strip its flagship Windows software of its audio- and video-playing capabilities.

Make no mistake: This case reaches far beyond Microsoft (and its investors). If European regulators win the day in the very end, they will establish a precedent that hurts global competition across virtually all industries.

Microsoft rightly argues that competition and consumers are hurt if businesses, even industry-leading companies, cannot freely improve their products. By effectively freezing Microsoft's incentive to innovate and compete in markets, European regulators limit consumer choice and remove one stick that spurs on Microsoft's competitors to create better products.

Other large companies with complex, market-leading products would be wise to assist Microsoft with its appeal. In fact, in a strange unfolding of events, European aircraft manufacturer Airbus filed to intervene on Microsoft's behalf and then withdrew after news of the filing became public.

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