March 28, 2004

A Welfare State for Aggrieved Market Losers

Robert Levy on the European Union's antitrust ruling against Microsoft:

Triple jeopardy. That is the net effect of the European Union's order imposing additional antitrust sanctions on the world's leading software maker. Microsoft must pay about Euros 500m (Pounds 335m) in fines, disclose more of its programming code so that rivals' server computers can more easily interact with Windows, and offer dual versions of Windows to personal computer makers in Europe - one version with Microsoft's Media Player and one without.


Microsoft tried to placate RealNetworks with a promise to have most PC makers worldwide install three competing media players. Even that was not enough. Mario Monti, the EU competition commissioner, wanted to make history, not settle the case. Although he conceded that there had been "substantial progress towards resolving the problems which have arisen in the past", he wondered about Microsoft's "future conduct" and concluded that "consumers in Europe will be better served with a decision that creates a strong precedent". By contrast, Brad Smith, Microsoft's general counsel, placed the emphasis where it properly belongs: "We have to be sure that the law is not just about competitors' complaints. Consumers must be part of the equation."

Far from promoting consumer interests, the latest EU order transforms antitrust regulation into a corporate welfare programme for market losers. The implications will not be confined to the Microsoft case. Without some semblance of regulatory consistency, companies competing globally will not be able to satisfy the dictates of divergent legal regimes. That means special interests pursuing their favourite antitrust forum in an effort to exercise the most political clout. The real costs: fewer jobs, less innovation, inferior products and higher prices.