Innovation, Leveraging and Essential Facilities: Interoperability Licensing in the EU Microsoft Case

25 Pages Posted: 2 Sep 2006

See all articles by Francois Leveque

Francois Leveque

École Nationale Supérieure des Mines de Paris - Centre d'Économie Industrielle (CERNA)

Date Written: March 2005

Abstract

This paper provides an economic analysis of the European Commission's decision against Microsoft's refusal to supply information on interoperability. It surveys the exceptional circumstances examined by the Commission in applying the essential facility doctrine to the case. It analyses the Commission's reasoning on Microsoft's leveraging its market power from one market to another. It discusses the amount Microsoft can request as a reasonable remuneration for the licensing of its property rights on interface. According to the author, the analysis of incentives to innovate, as proposed by the Commission, provides a sounder test forordering compulsory licensing that the new product condition introduced in Magill. However, the author points out that the assessment of incentives to innovate in the whole industry cannotbe conclusive in absence of more guidance on what constitutes a reasonable, non discriminatory and non strategic license. Regarding leveraging, the author considers that the Commission proposes a convincing story. Prejudice to consumers remains however hypothetical.

Suggested Citation

Leveque, Francois, Innovation, Leveraging and Essential Facilities: Interoperability Licensing in the EU Microsoft Case (March 2005). Available at SSRN: https://ssrn.com/abstract=927900 or http://dx.doi.org/10.2139/ssrn.927900

Francois Leveque (Contact Author)

École Nationale Supérieure des Mines de Paris - Centre d'Économie Industrielle (CERNA) ( email )

60, boulevard Saint Michel
75272 Paris Cedex 06, 75272
France

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