European Commission clears Microsoft-Nokia deal

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As widely expected the European Commission has cleared Microsoft's proposed acquisition of Nokia's Devices & Services division. The Commission's concluded that the deal would not raise any competition concerns because there is only a modest overlap between the two companies and several strong rivals (Apple and Samsung) will continue to compete with the merged entity. 

In a press release the European Commission notes that it investigated a number of vertical relationships between the two parties (various devices and software services pairings), but did not find any areas for concern, with a key point being that Microsoft is unlikely to restrict the supply of its platform software, apps, and services to third parties:

  1. Microsoft is unlikely to restrict the supply of its Windows OSs for smart mobile devices to third party device manufacturers after the transaction. Indeed, Microsoft's share in the mobile OS market is limited. Moreover, to better compete with the leading Android and Apple OS platforms, Microsoft likely needs to continue relying on third party device suppliers to broaden consumer adoption and attract mobile app developers.
  2. Microsoft is unlikely to restrict the supply of its mobile apps, such as its Office suite apps and its communication app Skype, to competing providers of smart mobile devices. Since Office apps are currently not available on tablets running third party OSs, a potential supply restriction would be limited to other tablet suppliers using Microsoft's Windows OSs. However, this strategy would hamper Microsoft's interest to attract more app developers and ultimately users to its OSs for smart mobile devices. For smartphones, the share of Office apps is minimal and there are many popular competing apps. Similarly, with regard to Skype, other popular apps continue to be available. Moreover, given the low market share of Windows in mobile OSs, limiting interoperability with third-party mobile OSs would ultimately weaken Skype's competitive offering.
  3. Microsoft would not have the ability to restrict the interoperability of competing smart mobile devices with Exchange Server, Microsoft's enterprise mail server software, because of the contractual terms of their current licenses to Microsoft patents covering the communication protocol thatmanages synchronisation of email, calendar and contacts between smart mobile devices and Microsoft Exchange. Moreover, given the limited portion of the market which could be foreclosed and the merged entity's very small market position in the smart mobile device market, such a conduct would in any event not produce anti-competitive effects.

The press release does go on to note that Nokia's position, following the transaction, with regards to licensing of its patent portfolio lies outside the scope of the European Commission's area of investigation, but does say the Commission "will remain vigilant and closely monitor Nokia's post-merger licensing practices under EU antitrust rules".

The EU Commission approval, together with the US regulatory approval that was announced earlier this week, means Microsoft has now cleared the major regulatory barriers for the Nokia deal. Some regulatory approvals from minor markets remains, but there is now no reason to doubt the acquisition will be formally completed some time in the first quarter of next year.

Via: ZDNet

Source / Credit: European Commission