Europe Wields Antitrust Law as an Imperialist Sword & Protectionist Shield

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REVIEW & OUTLOOK


Europe v. U.S. Business


January 17, 2008; Page A16


EU competition chief Neelie Kroes's determination to cow large, successful American firms with antitrust laws is nothing new. But the latest Brussels sally against Microsoft is a good time for Washington to wake up to Europe's regulatory imperialism.


In September, EU courts upheld Brussels's landmark 2004 ruling and €497 million fine against Microsoft. That case hinged on Microsoft's "bundling" of its Media Player with its dominant Windows operating system and alleged refusal to provide rivals with technology to write software that worked with Microsoft programs. Ms. Kroes is now going for the jugular. The formal inquiry she announced Monday focuses on Microsoft's packaging of its Internet Explorer Web browser with Windows, and the compatibility of its popular Office software suite with rival programs.


Brussels has also set its sights on other large U.S. firms. Just since September, EU antitrust regulators have dialed up a case against Qualcomm, continued processing claims against Intel, charged MasterCard with setting illegal fees, searched for reasons to block Google's purchase of DoubleClick, and forced Apple to cut prices for digital songs (though the iPod maker was cleared of any wrongdoing).


All of these cases target American companies that have already come under antitrust scrutiny in the U.S. But Brussels is an attractive venue for competitors to use European antitrust litigation to hobble a rival. We've seen a stampede of lawyers descend on the European capital since September's Microsoft ruling. The U.S. Justice Department has reacted, at most, with a stern press release. There was no American response as far as we could see to Monday's Microsoft news. Words do matter, as Barack Obama says. So does their absence.


Euro-American regulatory cooperation is currently in vogue, with the first meeting last fall of the Trans-Atlantic Economic Council and Washington's recent acceptance of international accounting standards. If there's one legal area that could benefit from such camaraderie, it's antitrust. We're not talking about an International Competition Court but, rather, mutual recognition of American rulings on U.S. companies and EU oversight of European firms. Other countries that want to sign up to the standards could also be included.


We're under no illusions that an arrangement on antitrust would come easily. Brussels seems to enjoy its newfound power. And while U.S. and EU laws on issues such as mergers have been converging, there's still a great deal of water between the two on the treatment of monopolies. For example, American authorities aren't as quick as their Continental counterparts to dismiss the benefits that dominant firms like Microsoft can offer consumers.


In the long run, Europe would also benefit from mutual recognition. In fast-growing economies like China, antitrust law is developing apace. What will be the reaction in Paris and Berlin when French and German companies start encountering "antitrust" cases in Beijing or Seoul?


Today's antitrust multiple-jeopardy -- Intel currently faces litigation in Europe, Japan, South Korea and New York -- is a potential disaster for business. If antitrust cooperation seems a long way off, that's all the more reason for Washington to start fighting back against European overreach.