Case T-201/04

Microsoft Corp.

v

Commission of the European Communities

(Competition – Abuse of dominant position – Client PC operating systems – Work group server operating systems – Streaming media players – Decision finding infringements of Article 82 EC – Refusal of the dominant undertaking to supply and authorise the use of interoperability information – Supply by the dominant undertaking of its client PC operating system conditional on the simultaneous acquisition of its media player – Remedies – Appointment of an independent monitoring trustee – Fine – Determination of the amount – Proportionality)

Summary of the Judgment

1. Competition – Administrative procedure – Commission decision finding an infringement – Decision requiring a complex economic or technical assessment

(Arts 81 EC and 82 EC)

2. Procedure – Application initiating proceedings – Reply – Formal requirements

(Statute of the Court of Justice, Art. 21; Rules of Procedure of the Court of First Instance, Art. 44(1)(c))

3. Competition – Dominant position – Abuse – Definition – Obligations on the dominant undertaking

(Art. 82 EC)

4. Competition – Dominant position – Abuse – Definition – Obligations on the dominant undertaking

(Art. 82 EC)

5. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

6. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

7. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

8. Competition – Dominant position – Relevant market – Definition – Criteria

(Art. 82 EC; Commission Notice 97/C 372/03)

9. Competition – Dominant position – Abuse – Leveraging

(Art. 82 EC)

10. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

11. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

12. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

13. International agreements – Community agreements – Primacy only over secondary legislation – Consequences for interpretation of Community law – Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

14. Competition – Dominant position – Abuse – Refusal to grant a licence for the use of a product covered by intellectual property rights

(Art. 82 EC)

15. Competition – Dominant position – Abuse – Tying

(Art. 82 EC)

16. Competition – Dominant position – Abuse – Tying

(Art. 82 EC)

17. Competition – Dominant position – Abuse – Tying

(Art. 82 EC)

18. Competition – Dominant position – Abuse – Tying

(Art. 82 EC)

19. Competition – Dominant position – Abuse – Definition – Obligations on the dominant undertaking – Competition on the basis of merit

(Art. 82 EC)

20. Actions for annulment – Pleas in law – Not possible to rely on WTO agreements to challenge the lawfulness of a Community act – Exceptions

(Art. 230 EC)

21. Competition – Administrative procedure – Commission decision finding an infringement – Remedies

(Art. 82 EC; Council Regulation No 17, Arts 3, 14 and 16)

22. Competition – Fines – Amount – Determination – Criteria

(Art. 82 EC)

1. Although as a general rule the Community Courts undertake a comprehensive review of the question as to whether or not the conditions for the application of the competition rules are met, their review of complex economic appraisals made by the Commission is necessarily limited to checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers.

Likewise, in so far as a Commission decision is the result of complex technical appraisals, those appraisals are in principle subject to only limited review by the Court, which means that the Community Courts cannot substitute their own assessment of matters of fact for the Commission’s.

However, while the Community Courts recognise that the Commission has a margin of appreciation in economic or technical matters, that does not mean that they must decline to review the Commission’s interpretation of economic or technical data. The Community Courts must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it.

(see paras 87-89, 379, 482, 564)

2. Under Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the Court of First Instance, each application is required to state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based. According to consistent case-law it is necessary, for an action to be admissible, that the basic matters of law and fact relied on be indicated, at least in summary form, coherently and intelligibly in the application itself. Whilst the body of the application may be supported and supplemented on specific points by references to extracts from documents annexed thereto, a general reference to other documents, even those annexed to the application, cannot make up for the absence of the essential arguments in law which, in accordance with the abovementioned provisions, must appear in the application.

Furthermore, it is not for the Court to seek and identify in the annexes the pleas and arguments on which it may consider the action to be based, since the annexes have a purely evidential and instrumental function.

The Court may take into account only those documents annexed to the application which support or supplement matters of fact or of law expressly set out in the body of the procedural documents by the applicant or defendant.

That interpretation of Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the Court of First Instance also applies to the conditions for admissibility of a reply, which according to Article 47(1) of the Rules of Procedure is intended to supplement the application.

(see paras 94-95, 99, 483)

3. Article 82 EC deals with the conduct of one or more economic operators involving the abuse of a position of economic strength which enables the operator concerned to hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers.

Furthermore, whilst the finding of a dominant position does not in itself imply any criticism of the undertaking concerned, that undertaking has a special responsibility, irrespective of the causes of that position, not to allow its conduct to impair genuine undistorted competition on the common market.

(see para. 229)

4. In proceedings brought on the basis of Article 82 EC, the Commission may define the concept of ‘interoperability’ as the capacity for two software products to exchange information and to use that information mutually in order to allow each of those software products to function in all the ways envisaged, without being bound by the definition given by Directive 91/250 on the legal protection of computer programs, from which it does not depart.

In that context, the Commission may determine the ‘degree of interoperability’ of software products by reference to what, in its view, is necessary, in the light of Article 82 EC, in order to enable developers of work group server operating systems competing with the dominant developer to remain viably on the market. Should it be established that the existing degree of interoperability does not enable those developers to remain viably on the market, it follows that the maintenance of effective competition on that market is being hindered.

In requiring, by way of remedy, that an undertaking in a dominant position disclose the interoperability information, the Commission refers to a detailed technical description of certain rules of interconnection and interaction that can be used within the work group networks to deliver work group services. That description does not extend to the way in which the undertaking implements those rules, in particular, to the internal structure or to the source code of its products.

The degree of interoperability thus required by the Commission enables competing operating systems to interoperate with the dominant undertaking’s domain architecture on an equal footing in order to be able to compete viably with the latter’s operating systems. It does not entail making competitors’ products work in exactly the same way as its own and does not enable its competitors to clone or reproduce its products or certain features of those products.

(see paras 192, 206, 225, 227-228, 230, 234, 236-238, 241, 259, 374-375)

5. In a decision penalising the refusal by a dominant undertaking to provide competing undertakings with interoperability information of software products, the Commission may refrain from making a finding on the issue whether the dominant undertaking’s communication protocols or the specifications of those protocols are covered by intellectual property rights and assume that the undertaking is able to rely on such rights. Thus the Commission may proceed on the premiss that the refusal to supply interoperability information might not be a mere refusal to supply a product or a service indispensable to the exercise of a specific activity but a refusal to license intellectual property rights. The Commission thus chooses the strictest legal test and therefore the one most favourable to the accused dominant undertaking. In such a situation, it is therefore necessary to ascertain whether the criteria which determine when an undertaking in a dominant position can be required to grant a licence relating to intellectual property rights are satisfied.

(see paras 283-284, 290)

6. Although undertakings are, as a rule, free to choose their business partners, in certain circumstances a refusal to supply on the part of a dominant undertaking may constitute an abuse of a dominant position within the meaning of Article 82 EC unless it is objectively justified.

The refusal by an undertaking holding a dominant position to license a third party to use a product covered by an intellectual property right cannot in itself constitute an abuse of a dominant position within the meaning of Article 82 EC.

It is only in exceptional circumstances that the exercise of the exclusive right by the owner of the intellectual property right may give rise to such an abuse and that, accordingly, it is permissible, in the public interest in maintaining effective competition on the market, to encroach upon the exclusive right of the holder of the intellectual property right by requiring him to grant licences to third parties seeking to enter or remain on that market.

The following circumstances, in particular, must be considered to be exceptional: in the first place, the refusal relates to a product or service indispensable to the exercise of a particular activity on a neighbouring market; in the second place, the refusal is of such a kind as to exclude any effective competition on that neighbouring market; in the third place, the refusal prevents the appearance of a new product for which there is potential consumer demand.

Once it is established that such circumstances are present, the refusal by the holder of a dominant position to grant a licence may infringe Article 82 EC unless the refusal is objectively justified.

Finally, in order that a refusal to give access to a product or service indispensable to the exercise of a particular activity may be considered abusive, it is necessary to distinguish two markets, namely, a market constituted by that product or service and on which the undertaking refusing to supply holds a dominant position and a neighbouring market on which the product or service is used in the manufacture of another product or for the supply of another service. The fact that the indispensable product or service is not marketed separately does not exclude from the outset the possibility of identifying a separate market. It is sufficient that a potential market or even a hypothetical market can be identified. Such is the case where the products or services are indispensable to the conduct of a particular business activity and where there is an actual demand for them on the part of undertakings which seek to carry on that business. It is decisive that two different stages of production are identified and that they are interconnected in that the upstream product is indispensable for supply of the downstream product.

(see paras 319, 331-335, 691, 1336)

7. For the purposes of application of Article 82 EC to the refusal of a dominant undertaking to grant a licence in the market for work group server operating systems, the ‘interoperability information’ must be regarded as being ‘indispensable’, inter alia because the interoperability is of significant competitive importance in that market, even if their lack of availability leads to competition being eliminated only gradually and not immediately.

(see paras 381, 428)

8. As stated in the Commission Notice on the definition of the relevant market for the purposes of Community competition law, ‘[a] relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use’. Supply-side substitutability may also be taken into account when defining markets in those situations in which its effects are equivalent to those of demand substitution in terms of effectiveness and immediacy. That means that suppliers are able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices.

With respect to operating systems, the Commission may correctly find that there is a market for work group server operating systems which is separate from the market for client PC operating systems.

(see paras 484-485, 531)

9. Where, in the context of proceedings relating to the application of Article 82 EC, the Commission takes issue with an undertaking for having used, by leveraging, its quasi-monopoly on a product market to influence a second product market, the abusive conduct alleged against the undertaking has its origin in its dominant position on the first product market. Thus, even if the Commission were wrongly to have considered that the undertaking was in a dominant position on the second product market, that could not of itself suffice to support a finding that the Commission was wrong to conclude that there had been an abuse of a dominant position.

(see para. 559)

10. For the purposes of application of Article 82 EC, the expressions ‘risk of elimination of competition’ and ‘likely to eliminate competition’ are used without distinction by the Community judicature to reflect the same idea, namely that Article 82 EC does not apply only from the time when there is no more, or practically no more, competition on the market. If the Commission were required to wait until competitors were eliminated from the market, or until their elimination was sufficiently imminent, before being able to take action under Article 82 EC, that would clearly run counter to the objective of that provision, which is to maintain undistorted competition in the common market and, in particular, to safeguard the competition that still exists on the relevant market.

In the case of a refusal by a dominant undertaking to grant a licence on the work group server operating systems market, the Commission has all the more reason to apply Article 82 EC before the elimination of competition has become a reality because that market is characterised by significant network effects and because the elimination of competition would therefore be difficult to reverse.

It is not necessary to demonstrate that all competition on the market would be eliminated. What matters, for the purpose of establishing an infringement of Article 82 EC, is that the refusal at issue is liable to, or is likely to, eliminate all effective competition on the market. It must be made clear that the fact that the competitors of the dominant undertaking retain a marginal presence in certain niches on the market cannot suffice to substantiate the existence of such competition.

(see paras 561-563, 593)

11. The fact that the dominant undertaking’s conduct prevents the appearance of a new product on the market falls to be considered under Article 82(b) EC, which prohibits abusive practices which consist in ‘limiting production, markets or technical developments to the … prejudice of consumers’.

The circumstance relating to the appearance of a new product cannot be the only parameter which determines whether a refusal to license an intellectual property right is capable of causing prejudice to consumers within the meaning of Article 82(b) EC. As that provision states, such prejudice may arise where there is a limitation not only of production or markets, but also of technical development.

Article 82 EC covers not only practices which may prejudice consumers directly but also those which indirectly prejudice them by impairing an effective competitive structure.

(see paras 643, 647, 664)

12. Although the burden of proof of the existence of the circumstances that constitute an infringement of Article 82 EC is borne by the Commission, it is for the dominant undertaking concerned, and not for the Commission, before the end of the administrative procedure, to raise any plea of objective justification and to support it with arguments and evidence. It then falls to the Commission, where it proposes to make a finding of an abuse of a dominant position, to show that the arguments and evidence relied on by the undertaking cannot prevail and, accordingly, that the justification put forward cannot be accepted.

The mere fact that a product is covered by intellectual property rights cannot constitute objective justification to refuse to grant a licence. If the mere fact of holding intellectual property rights could in itself constitute objective justification for such a refusal, the exception established by the case-law could never apply.

It is for the dominant undertaking which maintains that the granting of access to third parties to technology covered by intellectual property rights would have a significant negative impact on its incentives to innovate to support it with arguments and evidence.

(see paras 688-690, 697, 1144)

13. The primacy of international agreements concluded by the Community over provisions of secondary Community legislation means that such provisions must, so far as is possible, be interpreted in a manner that is consistent with those agreements. That principle of consistent interpretation applies only where an international agreement prevails over the provision of Community law concerned. Since an international agreement, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), does not prevail over primary Community law, that principle does not apply where, as here, the provision which falls to be interpreted is Article 82 EC.

Moreover, in a situation where the Commission is required to apply Article 82 EC to the factual and legal circumstances of a particular case and in which it must be presumed, in the absence of proof to the contrary, that the conclusions which it reached in that regard are the only ones that it could validly adopt, the Commission is not, strictly speaking, required to make a choice between several possible constructions of a text of Community law.

(see paras 797-799)

14. Where the Commission is penalising infringement of Article 82 EC and orders an undertaking in a dominant position to disclose ‘interoperability information’ to undertakings wishing to develop and distribute work group server operating systems and to allow them to use that information ‘subject to the application of reasonable and non-discriminatory conditions’, there is nothing to prevent the undertaking from giving access to that information through a licence if the information relates to a technology covered by a patent or by another form of intellectual property right.

The fact that there is a requirement that the conditions to which any licences are subject be reasonable and non-discriminatory does not mean that the dominant undertaking must impose the same conditions on every undertaking seeking such licences. It is not precluded that the conditions may be adapted to the specific situation of each of those undertakings and vary, for example, according to the extent of the information to which they seek access or the type of products in which they intend to implement the information.

(see paras 808, 810-811)

15. In order to determine whether the conduct of the dominant undertaking constitutes abusive tying, the Commission is entitled to base its finding on the following factors: first, the tying and tied products are two separate products; second, the undertaking concerned is dominant in the market for the tying product; third, the undertaking concerned does not give customers a choice to obtain the tying product without the tied product; and fourth, the practice in question forecloses competition. The Commission also takes into account the fact that the tying is not objectively justified.

Such justification may not be inferred from the advantages arising from the fact that tying ensures a uniform presence of the product on the market. Such a result cannot be allowed to be imposed unilaterally by an undertaking in a dominant position by means of tying.

Since the list of abusive practices set out in the second paragraph of Article 82 EC is not exhaustive, bundling by an undertaking in a dominant position may also infringe Article 82 EC where it does not correspond to the example given in Article 82(d) EC. Accordingly, in order to establish the existence of abusive bundling, the Commission is entitled to rely on Article 82 EC in its entirety and not exclusively on Article 82(d) EC.

(see paras 842-843, 852, 859-861, 1151-1152)

16. The distinctness of products for the purpose of an analysis under Article 82 EC has to be assessed by reference to customer demand. In the absence of independent demand for the allegedly tied product, there can be no question of separate products and no abusive tying.

Complementary products can constitute separate products for the purposes of Article 82 EC.

The fact that there are on the market independent companies specialising in the manufacture and sale of the tied product constitutes serious evidence of the existence of a separate market for that product.

The fact that tying takes the form of the technical integration of one product in another does not have the consequence that, for the purpose of assessing its impact on the market, that integration cannot be qualified as the bundling of two separate products.

Moreover, even when the tying of two products is consistent with commercial usage or when there is a natural link between the two products in question, it may none the less constitute abuse within the meaning of Article 82 EC, unless it is objectively justified.

Client PC operating systems, on the one hand, and streaming media players, on the other hand, constitute two separate products for the purposes of Article 82 EC, in the light of the nature and technical features of the products concerned, the facts observed on the market, the history of the development of the products concerned and also the dominant undertaking’s commercial practice on the market for client PC operating systems.

(see paras 917-918, 921-922, 925, 927, 933, 935, 942, 1341)

17. It does not follow from either Article 82(d) EC or the case-law that consumers must necessarily pay a certain price for the tied product in order for it to be concluded that they are subject to supplementary obligations within the meaning of that provision.

Moreover, neither Article 82(d) EC nor the case-law on bundling requires that consumers must be forced to use the tied product or prevented from using the same product supplied by a competitor of the dominant undertaking in order for the condition that the conclusion of contracts is made subject to acceptance of supplementary obligations to be capable of being regarded as satisfied.

(see paras 969-970)

18. While it is true that neither Article 82(d) EC nor, more generally, Article 82 EC contains any reference to the anti-competitive effect of bundling, the fact remains that, in principle, conduct will be regarded as abusive only if it is capable of restricting competition.

For the purposes of applying Article 82 EC to bundling, although the Commission may examine the actual effects which tying has had on the market and the way in which that market is likely to evolve, rather than merely considering – as it normally does in cases of abusive tying – that the tying has by its nature a foreclosure effect, does not mean that it adopted a new legal theory.

The fact that an undertaking in a dominant position in the market for client PC operating systems bundles the streaming media player with the client PC operating system – the operating system pre-installed on the great majority of client PCs sold throughout the world – without the possibility of removing that media player from the operating system, allows the media player to benefit from the ubiquity of that operating system on client PCs, which cannot be counterbalanced by the other methods of distributing media players. Thus, owing to the bundling, the media player enjoys an unparalleled presence on client PCs throughout the world, because it thereby allows that media player automatically to achieve a level of market penetration corresponding to that of the dominant undertaking’s client PC operating system, without having to compete on the merits with competing products. Such a tied sale is moreover capable of having an appreciable impact on content providers and software designers, since the market for streaming media players is characterised by significant indirect network effects.

(see paras 867, 1035-1036, 1038, 1058, 1060-1061)

19. Article 82 EC is intended to prohibit a dominant undertaking from strengthening its position by recourse to means other than those based on competition on the merits.

(see para. 1070)

20. Given their nature and structure, agreements of the World Trade Organisation (WTO) are not in principle among the rules in the light of which the Community judicature is to review the legality of measures adopted by the Community institutions. It is only where the Community has intended to implement a particular obligation assumed under the WTO or where the Community measure refers expressly to specific provisions of the WTO agreements that the Community judicature must review the legality of the Community measure in question in the light of the WTO rules.

There is nothing in the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to prevent the competition authorities of the members of the WTO from imposing remedies which limit or regulate the exploitation of intellectual property rights held by an undertaking in a dominant position where that undertaking exercises those rights in an anti-competitive manner. Thus, it follows expressly from Article 40(2) of the TRIPS Agreement that the members of the WTO are entitled to regulate the abusive use of such rights in order to avoid effects which harm competition.

(see paras 801-802, 1189-1190, 1192)

21. When the Commission finds in a decision that an undertaking has infringed Article 82 EC, that undertaking is required to take, without delay, all the measures necessary to comply with that provision, even in the absence of specific measures prescribed by the Commission in that decision. Where remedies are provided for in the decision, the undertaking concerned is required to implement them – and to assume all the costs associated with their implementation –, failing which it exposes itself to liability for periodic penalty payments imposed pursuant to Article 16 of Regulation No 17.

The Commission it is not entitled to delegate to a third party the powers of investigation and enforcement conferred on it by Regulation No 17. On the other hand, it is entitled to monitor the implementation by the undertaking concerned of the remedies ordered in an infringement decision and to ensure that the other measures necessary to put an end to the anti-competitive effects of the infringement are fully implemented without delay. For those purposes, it is entitled to use the powers of investigation provided for in Article 14 of Regulation No 17 and, where necessary, to use an external expert in order, inter alia, to resolve technical issues.

Moreover, where the Commission decides to obtain the assistance of an external expert it may communicate to that expert any information and documents which it may have obtained in the exercise of its powers of investigation under Article 14 of Regulation No 17.

By establishing a monitoring mechanism involving the appointment of an independent monitoring trustee required to act on his own initiative and upon application by third parties, whose role is not limited to putting questions to the undertaking concerned and reporting the answers to the Commission, who has access to information, documents, premises and employees and also to the source code of its relevant products, without limit in time, the Commission goes far beyond the situation in which it retains its own external expert to provide advice when it investigates the implementation of remedies.

There is no provision of Regulation No 17 that authorises the Commission to require an undertaking to bear the costs which the Commission incurs as a result of monitoring the implementation of remedies.

It is for the Commission, in its capacity as authority responsible for applying the Community competition rules, to pursue the implementation of infringement decisions in an independent, objective and impartial manner. It would be incompatible with its responsibility in that regard for the effective implementation of Community law to depend on or be influenced by the willingness or the capacity of the addressee of the decision to bear such costs.

Moreover, the Commission does not have unlimited discretion when formulating remedies to be imposed on undertakings for the purpose of putting an end to an infringement. In the context of the application of Article 3 of Regulation No 17, the principle of proportionality requires that the burdens imposed on undertakings in order to bring an infringement to an end do not exceed what is appropriate and necessary to attain the objective sought, namely re-establishment of compliance with the rules infringed.

(see paras 1256, 1264-1266, 1268-1270, 1274-1276)

22. In the case of an undertaking which has been found to have committed two abuses of a dominant position, the Commission may, in order to assess the gravity of the infringement for the purposes of determining the amount of the fine, take account of the fact that those two abuses form part of a leveraging strategy whereby the dominant position on one product market is used to extend that dominant position to other adjacent markets.

In such a case, the Commission may take a single starting point for the fine for the two abuses, without having to explain what that amount represented or how it was apportioned between the two types of abuse.

The obligation to state reasons does not require the Commission to indicate in its decision the figures relating to the method of calculating the fines.

The Commission may apply a weighting to that amount to ensure that the fine was sufficiently deterrent and to reflect the dominant undertaking’s significant economic capacity. In that regard, the possibility cannot be precluded that the undertaking might commit the same type of infringement in future with other products.

(see paras 1344, 1352, 1360-1361, 1363)

JUDGMENT OF THE COURT OF FIRST INSTANCE (Grand Chamber)

17 September 2007 ( )

(Competition – Abuse of dominant position – Client PC operating systems – Work group server operating systems – Streaming media players – Decision finding infringements of Article 82 EC – Refusal of the dominant undertaking to supply and authorise the use of interoperability information – Supply by the dominant undertaking of its client PC operating system conditional on the simultaneous acquisition of its media player – Remedies – Appointment of an independent monitoring trustee – Fine – Determination of the amount – Proportionality)

In Case T-201/04,

Microsoft Corp., established in Redmond, Washington (United States), represented by J.-F. Bellis, lawyer, and I. Forrester QC,

applicant,

supported by

The Computing Technology Industry Association, Inc., established in Oakbrook Terrace, Illinois (United States), represented by G. van Gerven and T. Franchoo, lawyers, and B. Kilpatrick, Solicitor,

DMDsecure.com BV, established in Amsterdam (Netherlands),

MPS Broadband AB, established in Stockholm (Sweden),

Pace Micro Technology plc, established in Shipley, West Yorkshire (United Kingdom),

Quantel Ltd, established in Newbury, Berkshire (United Kingdom),

Tandberg Television Ltd, established in Southampton, Hampshire (United Kingdom),

represented by J. Bourgeois, lawyer,

Association for Competitive Technology, Inc., established in Washington, DC (United States), represented by L. Ruessmann and P. Hecker, lawyers, and K. Bacon, Barrister,

TeamSystem SpA, established in Pesaro (Italy),

Mamut ASA, established in Oslo (Norway),

represented by G. Berrisch, lawyer,

Exor AB, established in Uppsala (Sweden), represented by S. Martínez Lage, H. Brokelmann and R. Allendesalazar Corcho, lawyers,

interveners,

v

Commission of the European Communities, represented initially by R. Wainwright, F. Castillo de la Torre, P. Hellström and A. Whelan, acting as Agents, and subsequently by F. Castillo de la Torre, P. Hellström and A. Whelan,

defendant,

supported by

Software & Information Industry Association, established in Washington, DC, represented by J. Flynn QC, C. Simpson and T. Vinje, Solicitors, and D. Paemen, N. Dodoo and M. Dolmans, lawyers,

Free Software Foundation Europe eV, established in Hamburg (Germany), represented by C. Piana, lawyer,

Audiobanner.com, established in Los Angeles, California (United States), represented by L. Alvizar Ceballos, lawyer,

European Committee for Interoperable Systems (ECIS), established in Brussels (Belgium), represented by D. Paemen, N. Dodoo and M. Dolmans, lawyers, and J. Flynn QC,

interveners,

APPLICATION for annulment of Commission Decision 2007/53/EC of 24 March 2004 relating to a proceeding pursuant to Article 82 [EC] and Article 54 of the EEA Agreement against Microsoft Corp. (Case COMP/C‑3/37.792 – Microsoft) (OJ 2007 L 32, p. 23) or, in the alternative, annulment or reduction of the fine imposed on the applicant in that decision,

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Grand Chamber),

composed of: B. Vesterdorf, President, M. Jaeger, J. Pirrung, R. García‑Valdecasas, V. Tiili, J. Azizi, J.D. Cooke, A.W.H. Meij, N.J. Forwood, E. Martins Ribeiro, I. Wiszniewska-Białecka, V. Vadapalas and I. Labucka, Judges,

Registrar: E. Coulon,

having regard to the written procedure and further to the hearing on 24, 25, 26, 27 and 28 April 2006,

gives the following

Judgment

Background to the dispute

1 Microsoft Corp., a company established in Redmond, Washington (United States), designs, develops and markets a wide variety of software products for different kinds of computing devices. Those software products include, in particular, operating systems for client personal computers (‘client PCs’), operating systems for work group servers and streaming media players. Microsoft also provides technical assistance for its various products.

2 On 15 September 1998, Mr Green, a Vice-President of Sun Microsystems, Inc. (‘Sun’), a company established in Palo Alto, California (United States) which supplies, in particular, servers and server operating systems, wrote to Mr Maritz, a Vice-President of Microsoft, as follows:

‘We are writing to you to request that Microsoft provide [Sun] with the complete information required to allow Sun to provide native support for COM objects on Solaris.

We also request that Microsoft provide [Sun] with the complete information required to allow [Sun] to provide native support for the complete set of Active Directory technologies on Solaris.

We believe it is in the industry’s best interest that applications written to execute on Solaris be able to seamlessly communicate via COM and/or Active Directory with the Windows operating systems and/or with Windows-based software.

We believe that Microsoft should include a reference implementation and such other information as is necessary to insure, without reverse engineering, that COM objects and the complete set of Active Directory technologies will run in full compatible fashion on Solaris. We think it necessary that such information be provided for the full range of COM objects as well as for the full set of Active Directory technologies currently on the market. We also think it necessary that such information be provided in a timely manner and on a continuing basis for COM objects and Active Directory technologies which are to be released to the market in the future.’

3 That letter will be referred to below as ‘the letter of 15 September 1998’.

4 By letter of 6 October 1998, Mr Maritz replied to the letter of 15 September 1998. In his letter, he said:

‘Thank you for your interest in working with Windows. We have some mutual customers using our products, and I think it is great you are interested in opening up your system to interoperate with Windows. Microsoft has always believed in helping software developers, including [its] competitors, build the best possible products and interoperability for [its] platform.

You may not realise that the information you requested on how to interoperate with COM and the Active Directory technologies is already published and available to you and every other software developer in the world via the Microsoft Developer Network (MSDN) Universal product. MSDN contains comprehensive information about the services and interfaces of the Windows platform and is a great source of information for developers interested in writing to or interoperating with Windows. In fact, Sun currently has 32 active licenses for the MSDN Universal subscription. Furthermore, as your company has done in the past, I assume you will be sending a significant number of people to attend our Professional Developers Conference in Denver October 11 – October 15, 1998. This will be another venue to get the technical information you are seeking in order to work with our systems technologies. Some of the 23 Sun employees that attend[ed] last year[’]s conference should be able to provide you with their comments on the quality and depth of information discussed at these Professional Developers Conferences.

You will be pleased to know that there is already a reference implementation of COM on Solaris. This implementation of COM on Solaris is a fully supported binary available from Microsoft. Source code for COM can be licensed from other sources including Software AG. …

Regarding the Active Directory, we have no plans to “port” [it] to Solaris. However, to satisfy our mutual customers there are many methods with varying levels of functionality in order to interoperate with the Active Directory. For example, you can use the standard LDAP to access the Windows NT Server Active Directory from Solaris.

If after attending [the Professional Developers Conference] and reading through all the public MSDN content you should require some additional support, our Developer Relations Group has account managers who strive to help developers who need additional support for Microsoft’s platforms. I have asked Marshall Goldberg, the Lead Program Manager, to make himself available should you need it …’

5 Mr Maritz’s letter of 6 October 1998 will be referred to below as ‘the letter of 6 October 1998’.

6 On 10 December 1998, Sun lodged a complaint with the Commission pursuant to Article 3 of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81 EC] and [82 EC] (OJ, English Special Edition 1959-62, p. 87).

7 Sun’s complaint related to Microsoft’s refusal to give it the information and technology necessary to allow its work group server operating systems to interoperate with the Windows client PC operating system.

8 On 2 August 2000, the Commission sent Microsoft a first statement of objections (‘the first statement of objections’), which related in effect to questions concerning the interoperability of Windows client PC operating systems and other suppliers’ server operating systems (client/server interoperability).

9 Microsoft responded to the first statement of objections on 17 November 2000.

10 In the meantime, in February 2000, the Commission, acting on its own initiative, launched an investigation relating, particularly, to Microsoft’s Windows 2000 generation of client PC and work group server operating systems and to the integration by Microsoft of its Windows Media Player in its Windows client PC operating system. The client PC operating system in the Windows 2000 range was intended for professional use and was called ‘Windows 2000 Professional’, whereas the server operating systems in that range were presented under the three following versions: Windows 2000 Server, Windows 2000 Advanced Server and Windows 2000 Datacenter Server.

11 That investigation concluded on 29 August 2001, when the Commission sent Microsoft a second statement of objections (‘the second statement of objections’), in which it reiterated its previous objections concerning client/server interoperability. The Commission also addressed certain questions relating to interoperability between work group servers (server/server interoperability). In addition, the Commission raised a number of questions concerning the integration of Windows Media Player in the Windows client PC operating system.

12 Microsoft responded to the second statement of objections on 16 November 2001.

13 In December 2001, Microsoft sent the Commission a report containing the results and the analysis of a survey carried out by Mercer Management Consulting (‘Mercer’).

14 Between April and June 2003, the Commission conducted a wide-ranging market enquiry, sending a series of requests for information to a number of companies and associations pursuant to Article 11 of Regulation No 17 (‘the 2003 market enquiry’).

15 On 6 August 2003, the Commission sent Microsoft a third statement of objections, which was, according to the Commission, intended to supplement the two earlier statements of objections and to indicate the remedies it proposed to order (‘the third statement of objections’).

16 By letter of 17 October 2003, Microsoft responded to the third statement of objections.

17 On 31 October 2003, Microsoft sent the Commission a report containing the results and the analysis of two further surveys conducted by Mercer.

18 A hearing was held by the Commission on 12, 13 and 14 November 2003.

19 On 1 December 2003, Microsoft presented supplemental observations on the third statement of objections.

20 On 24 March 2004, the Commission adopted Decision 2007/53/EC relating to a proceeding pursuant to Article 82 [EC] and Article 54 of the EEA Agreement against Microsoft Corp. (Case COMP/C-3.37.792 – Microsoft) (OJ 2007 L 32, p. 23; ‘the contested decision’).

The contested decision

21 In the contested decision, the Commission finds that Microsoft infringed Article 82 EC and Article 54 of the Agreement on the European Economic Area (EEA) by twice abusing a dominant position.

22 The Commission first identifies three separate worldwide product markets and considers that Microsoft had a dominant position on two of them. It then finds that Microsoft had engaged in two kinds of abusive conduct. As a result it imposes a fine and a number of remedies on Microsoft.

I – Relevant product markets and geographic market

23 The contested decision identifies three separate product markets, namely the markets for, respectively, client PC operating systems (recitals 324 to 342 to the contested decision), work group server operating systems (recitals 343 to 401 to the contested decision) and streaming media players (recitals 402 to 425 to the contested decision).

24 The first market defined in the contested decision is the market for client PC operating systems. Operating systems are defined as ‘system software’ which controls the basic functions of the computer and enables the user to make use of the computer and run application software on it (recital 37 to the contested decision). Client PCs are defined as general-purpose computers designed for use by one person at a time and capable of being connected to a network (recital 45 to the contested decision).

25 As regards the second market, the contested decision defines work group server operating systems as operating systems designed and marketed to deliver collectively ‘basic infrastructure services’ to relatively small numbers of client PCs connected to small or medium-sized networks (recitals 53 and 345 to the contested decision).

26 The contested decision identifies, more particularly, three types of services. These are, first, the sharing of files stored on servers, second, the sharing of printers and, third, the administration of groups and users, that is to say, the administration of the means whereby those concerned can access network services (recitals 53 and 345 to the contested decision). This last type of services is that of ensuring that users have access to and make use of the network resources in a secure manner, first, by authenticating users and second, by checking that they are authorised to perform a particular action (recital 54 to the contested decision). The contested decision states that, in order to provide for the efficient storing and checking of group and user administration information, work group server operating systems rely extensively on ‘directory service’ technologies (recital 55 to the contested decision). The directory service included in Microsoft’s Windows 2000 Server operating system is called ‘Active Directory’ (recital 149 to the contested decision).

27 According to the contested decision, the three types of services described above are closely interrelated in work group server operating systems. They may be broadly described as a ‘single service’, but viewed from two different perspectives, namely that of the user (file and print services) and that of the network administrator (group and user administration services) (recital 56 to the contested decision). The contested decision characterises those different services as ‘work group services’.

28 The third market identified in the contested decision is the streaming media player market. Media players are defined as software products capable of reading audio and video content in digital form, that is to say, of decoding the corresponding data and translating them into instructions for the hardware (for example, loudspeakers or a display) (recital 60 to the contested decision). Streaming media players are capable of reading audio and video content ‘streamed’ across the Internet (recital 63 to the contested decision).

29 As regards the relevant geographic market, the Commission finds in the contested decision, as stated at paragraph 22 above, that it has a worldwide dimension for each of the three product markets (recital 427 to the contested decision).

II – Dominant position

30 In the contested decision, the Commission finds that Microsoft has had a dominant position on the client PC operating systems market since at least 1996 and also on the work group server operating systems market since 2002 (recitals 429 to 541 to the contested decision).

31 As regards the client PC operating systems market, the Commission relies essentially on the following factors to arrive at that conclusion:

– Microsoft’s market shares are over 90% (recitals 430 to 435 to the contested decision);

– Microsoft’s market power has ‘enjoyed an enduring stability and continuity’ (recital 436 to the contested decision);

– there are significant barriers to market entry, owing to indirect network effects (recitals 448 to 464 to the contested decision);

– those network effects derive, first, from the fact that users like platforms on which they can use a large number of applications and, second, from the fact that software designers write applications for the client PC operating systems that are the most popular among users (recitals 449 and 450 to the contested decision).

32 The Commission states at recital 472 to the contested decision that that dominant position presents ‘extraordinary features’ in that Windows is not only a dominant product on the market for client PC operating systems but, in addition, is the ‘de facto standard’ for those systems.

33 As regards the work group server operating systems market, the Commission relies, in substance, on the following factors:

– Microsoft’s market share is, at a conservative estimate, at least 60% (recitals 473 to 499 to the contested decision);

– the position of Microsoft’s three main competitors on that market is as follows: Novell, with its NetWare software, has 10 to 25%; vendors of Linux products have a market share of 5 to 15%; and vendors of UNIX products have a market share of 5 to 15% (recitals 503, 507 and 512 to the contested decision);

– the work group server operating systems market is characterised by the existence of significant entry barriers, owing in particular to network effects and to Microsoft’s refusal to disclose interoperability information (recitals 515 to 525 to the contested decision);

– there are close commercial and technological links between the latter market and the client PC operating systems market (recitals 526 to 540 to the contested decision).

34 Linux is an ‘open source’ operating system released under the ‘GNU GPL (General Public Licence)’. Strictly speaking, it is only a code base, called the ‘kernel’, which performs a limited number of services specific to an operating system. It may, however, be linked to other layers of software to form a ‘Linux operating system’ (recital 87 to the contested decision). Linux is used in particular as the basis for work group server operating systems (recital 101 to the contested decision) and is thus present on the work group server operating systems market in conjunction with Samba software, which is also released under the ‘GNU GPL’ licence (recitals 506 and 598 to the contested decision).

35 ‘UNIX’ designates a number of operating systems that share certain common features (recital 42 to the contested decision). Sun has developed a UNIX-based work group server operating system called ‘Solaris’ (recital 97 to the contested decision).

III – Abuse of a dominant position

A – Refusal to supply and authorise the use of interoperability information

36 The first abusive conduct in which Microsoft is found to have engaged consists in its refusal to supply its competitors with ‘interoperability information’ and to authorise the use of that information for the purpose of developing and distributing products competing with Microsoft’s own products on the work group server operating systems market, between October 1998 and the date of notification of the contested decision (Article 2(a) of the contested decision). That conduct is described at recitals 546 to 791 to the contested decision.

37 For the purposes of the contested decision, ‘interoperability information’ is the ‘complete and accurate specifications for all the protocols [implemented] in Windows work group server operating systems and … used by Windows work group servers to deliver file and print services and group and user administrative services, including the Windows domain controller services, Active Directory services and “group Policy” services to Windows work group networks’ (Article 1(1) of the contested decision).

38 ‘Windows work group network’ is defined as ‘any group of Windows client PCs and Windows work group servers linked together via a computer network’ (Article 1(7) of the contested decision).

39 A ‘protocol’ is defined as ‘a set of rules of interconnection and interaction between various instances of Windows work group server operating systems and Windows client PC operating systems running on different computers in a Windows work group network’ (Article 1(2) of the contested decision).

40 In the contested decision, the Commission emphasises that the refusal in question does not relate to Microsoft’s ‘source code’, but only to specifications of the protocols concerned, that is to say, to a detailed description of what the software in question must achieve, in contrast to the implementations, consisting in the implementation of the code on the computer (recitals 24 and 569 to the contested decision). It states, in particular, that it ‘does not contemplate ordering Microsoft to allow copying of Windows by third parties’ (recital 572 to the contested decision).

41 The Commission further considers that Microsoft’s refusal to Sun is part of a general pattern of conduct (recitals 573 to 577 to the contested decision). It also asserts that Microsoft’s conduct involves a disruption of previous, higher levels of supply (recitals 578 to 584 to the contested decision), causes a risk of elimination of competition on the work group server operating systems (recitals 585 to 692 to the contested decision) and has a negative effect on technical development and on consumer welfare (recitals 693 to 708 to the contested decision).

42 Last, the Commission rejects Microsoft’s arguments that its refusal is objectively justified (recitals 709 to 778 to the contested decision).

B – Tying of the Windows client PC operating system and Windows Media Player

43 The second abusive conduct in which Microsoft is found to have engaged consists in the fact that from May 1999 to the date of notification of the contested decision Microsoft made the availability of the Windows client PC operating system conditional on the simultaneous acquisition of the Windows Media Player software (Article 2(b) of the contested decision). That conduct is described at recitals 792 to 989 to the contested decision.

44 In the contested decision, the Commission considers that that conduct satisfies the conditions for a finding of a tying abuse for the purposes of Article 82 EC (recitals 794 to 954 to the contested decision). First, it reiterates that Microsoft has a dominant position on the client PC operating systems market (recital 799 to the contested decision). Second, it considers that streaming media players and client PC operating systems constitute separate products (recitals 800 to 825 to the contested decision). Third, it asserts that Microsoft does not give consumers the opportunity to buy Windows without Windows Media Player (recitals 826 to 834 to the contested decision). Fourth, it contends that the tying in question restricts competition on the media players market (recitals 835 to 954 to the contested decision).

45 Last, the Commission rejects Microsoft’s arguments to the effect that, first, the tying in question produces efficiency gains capable of offsetting the anti-competitive effects identified in the contested decision (recitals 955 to 970 to the contested decision) and, second, Microsoft had no interest in ‘anti-competitive’ tying (recitals 971 to 977 to the contested decision).

IV – Fine and remedies

46 In respect of the two abuses identified in the contested decision, a fine of EUR 497 196 304 is imposed (Article 3 of the contested decision).

47 Furthermore, the first paragraph of Article 4 of the contested decision requires that Microsoft bring an end to the infringement referred to in Article 2, in accordance with Articles 5 and 6 of that decision. Microsoft must also refrain from repeating any act or conduct that might have the same or equivalent object or effect to those abuses (second paragraph of Article 4 of the contested decision).

48 By way of remedy for the abusive refusal referred to in Article 2(a) of the contested decision, Article 5 of that decision provides as follows:

‘(a) Microsoft … shall, within 120 days of the date of notification of [the contested decision], make the interoperability information available to any undertaking having an interest in developing and distributing work group server operating system products and shall, on reasonable and non-discriminatory terms, allow the use of the interoperability information by such undertakings for the purpose of developing and distributing work group server operating system products;

(b) Microsoft … shall ensure that the interoperability information made available is kept updated on an ongoing basis and in a timely manner;

(c) Microsoft … shall, within 120 days of the date of notification of [the contested decision], set up an evaluation mechanism that will give interested undertakings a workable possibility of informing themselves about the scope and terms of use of the interoperability information; as regards this evaluation mechanism, Microsoft … may impose reasonable and non-discriminatory conditions to ensure that access to the interoperability information is granted for evaluation purposes only;

…’

49 By way of remedy for the abusive tying referred to in Article 2(b) of the contested decision, Article 6 of that decision orders Microsoft to offer, within 90 days of the date of notification of that decision, a full-functioning version of the Windows client PC operating system which does not incorporate Windows Media Player, although Microsoft retains the right to offer a bundle of the Windows client PC operating system and Windows Media Player.

50 Last, Article 7 of the contested decision provides:

‘Within 30 days of the date of notification of [the contested decision], Microsoft … shall submit a proposal to the Commission for the establishment of a suitable mechanism assisting the Commission in monitoring [Microsoft’s] compliance with [the contested decision]. That mechanism shall include a monitoring trustee who shall be independent from Microsoft …

In case the Commission considers [Microsoft’s] proposed monitoring mechanism not suitable it retains the right to impose such a mechanism by way of a decision.’

Proceedings for violation of United States antitrust law

51 In parallel with the Commission’s investigation, Microsoft was the subject of an investigation for violation of the United States antitrust legislation.

52 In 1998, the United States of America, 20 States and the District of Columbia brought proceedings against Microsoft under the Sherman Act. Their complaints concerned the measures taken by Microsoft against Netscape’s Internet Navigator and Sun’s Java technologies. The States concerned also brought actions against Microsoft for violation of their own antitrust legislation.

53 After the United States Court of Appeals for the District of Columbia Circuit (‘the Court of Appeals’), on appeal by Microsoft against the judgment of 3 April 2000 of the United States District Court for the District of Columbia (‘the District Court’), had given its judgment on 28 June 2001, Microsoft reached a settlement with the United States Department of Justice and the Attorneys General of nine States (‘the United States settlement’) in November 2001, in which two types of commitment were given by Microsoft.

54 First, Microsoft agreed to draw up the specifications of the communication protocols used by the Windows server operating systems in order to ‘interoperate’, that is to say, to make them compatible with the Windows client PC operating systems and to grant third parties licences relating to those specifications on specific conditions.

55 Second, the United States settlement provides that Microsoft must allow original equipment manufacturers (‘OEMs’) and end users to activate or to eliminate access to its middleware. Windows Media Player is one of the products in that category, as defined in the United States settlement. Those provisions are intended to ensure that suppliers of media software can develop and distribute products that function properly with Windows.

56 Those provisions were confirmed by a judgment of the District Court of 1 November 2002.

57 On 30 June 2004, the Court of Appeals, on appeal by the State of Massachusetts, affirmed the judgment of the District Court of 1 November 2002.

58 Pursuant to the United States settlement, the Microsoft Communications Protocol Program (‘the MCPP’) was set up in August 2002.

Procedure

59 By application lodged at the Registry of the Court of First Instance on 7 June 2004, Microsoft brought the present action.

60 By separate document lodged at the Court Registry on 25 June 2004, Microsoft lodged an application under Article 242 EC for suspension of operation of Article 4, Article 5(a) to (c) and Article 6(a) of the contested decision.

61 By order of 22 December 2004 in Case T‑201/04 R Microsoft v Commission [2004] ECR II‑4463, the President of the Court dismissed that application and reserved the costs.

62 By order of 9 March 2005, the President of the Fourth Chamber of the Court granted the following associations and companies leave to intervene in the proceedings in support of the form of order sought by Microsoft:

– The Computing Technology Industry Association, Inc. (‘CompTIA’);

– DMDsecure.com BV, MPS Broadband AB, Pace Micro Technology plc, Quantel Ltd and Tandberg Television Ltd (‘DMDsecure and Others’);

– Association for Competitive Technology, Inc. (‘ACT’);

– TeamSystem SpA and Mamut ASA;

– Exor AB.

63 By the same order, the President of the Fourth Chamber of the Court granted the following associations and companies leave to intervene in the proceedings in support of the form of order sought by the Commission:

– Software & Information Industry Association (‘SIIA’);

– Free Software Foundation Europe eV (‘FSFE’);

– Audiobanner.com, trading as ‘VideoBanner’;

– RealNetworks, Inc.

64 By letters of 13 December 2004, 9 March, 27 June and 9 August 2005, Microsoft requested that certain confidential matters in the application, the defence, the reply, Microsoft’s observations on the statements in intervention and the rejoinder not be communicated to the interveners. The applicant produced a non-confidential version of those procedural documents and only those non-confidential texts were furnished to the interveners referred to in paragraphs 62 and 63 above. Those interveners raised no objections in that regard.

65 The interveners referred to in paragraphs 62 and 63 above lodged their own statements in intervention within the prescribed period. The main parties submitted their observations on those statements in intervention on 13 June 2005.

66 By order of 28 April 2005 in Case T‑201/04 Microsoft v Commission [2005] ECR II‑1491, the President of the Fourth Chamber granted the European Committee for Interoperable Systems (ECIS) leave to intervene in the proceedings in support of the form of order sought by the Commission. As that association’s application to intervene was lodged after expiry of the period referred to in Article 116(6) of the Rules of Procedure of the Court, it was ordered to submit its observations during the oral procedure, on the basis of the Report for the Hearing, with which it was provided.

67 By decision of the Plenary Conference of 11 May 2005, the case was referred to the Fourth Chamber, Extended Composition, of the Court of First Instance.

68 By decision of the Plenary Conference of 7 July 2005, the case was referred to the Grand Chamber of the Court of First Instance and assigned to a new Judge-Rapporteur.

69 By order of the President of the Grand Chamber of 16 January 2006, RealNetworks was removed from the case as intervener in support of the form of order sought by the Commission.

70 On 1 February 2006, the parties were invited by the Court to attend an informal meeting before the President of the Grand Chamber and the Judge-Rapporteur with a view to finalising the arrangements for the hearing. That meeting took place at the Court on 10 March 2006.

71 Upon hearing the Judge-Rapporteur, the Court of First Instance (Grand Chamber) decided to open the oral procedure and, pursuant to Article 64 of its Rules of Procedure, invited the main parties to produce certain documents and to answer a series of questions. They complied with those requests within the prescribed period.

72 The parties presented oral argument and their answers to the questions put by the Court at the hearing on 24, 25, 26, 27 and 28 April 2006.

73 At the hearing, Microsoft was requested by the Court to lodge a copy of the requests for information sent by the Commission in connection with the 2003 market enquiry, concerning the question of media players, and of the answers to those requests for information, and also of the reports containing the results and analysis of the surveys conducted by Mercer (‘the Mercer reports’). Microsoft produced those various documents within the prescribed periods.

74 By letter from the Court of 3 May 2006, Microsoft was requested to produce a copy of the other requests for information issued by the Commission in connection with the 2003 market enquiry and of the replies to those requests. Microsoft complied with that request within the prescribed period.

75 The President of the Grand Chamber closed the oral procedure by decision of 22 June 2006.

Forms of order sought by the parties

76 Microsoft claims that the Court should:

– annul the contested decision;

– in the alternative, annul or substantially reduce the fine;

– order the Commission to pay the costs;

– order SIIA, FSFE and Audiobanner.com to pay the costs relating to their intervention.

77 The Commission contends that the Court should:

– dismiss the action;

– order Microsoft to pay the costs.

78 CompTIA, ACT, TeamSystem and Mamut claim that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

79 DMDsecure and Others claim that the Court should:

– annul Article 2(b), Article 4, Article 6(a) and Article 7 of the contested decision;

– order the Commission to pay the costs.

80 Exor claims that the Court should:

– annul Articles 2 and 4, Article 6(a) and Article 7 of the contested decision;

– order the Commission to pay the costs.

81 SIIA, FSFE, Audiobanner.com and ECIS contend that the Court should:

– dismiss the action;

– order Microsoft to pay the costs.

Law

82 It is appropriate to examine, first of all, the pleas relating to the forms of order seeking annulment of the contested decision and, next, those relating to the forms of order seeking annulment or a reduction of the fine.

I – Forms of order seeking annulment of the contested decision

83 The pleas in law which Microsoft puts forward in support of its application for annulment of the contested decision are centred on three issues, namely, first, the refusal to supply and authorise the use of interoperability information; second, the tying of the Windows client PC operating system and Windows Media Player; and, third, the obligation to appoint an independent monitoring trustee responsible for ensuring that Microsoft complies with the contested decision.

A – Preliminary issues

84 In its written pleadings, the Commission raises a number of issues relating to the extent of review by the Community Courts and the admissibility of a number of annexes to the application and the reply.

1. The extent of review by the Community Courts

85 The Commission claims that the contested decision rests on a number of considerations involving complex technical and economic assessments. It submits that, according to the case-law, the Community Courts can carry out only a limited review of such assessments (Case C‑269/90 Technische Universität München [1991] ECR I‑5469, paragraph 13; Joined Cases C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P Aalborg Portland and Others v Commission [2004] ECR I‑123, paragraph 279; and Case T‑28/03 Holcim (Deutschland) v Commission [2005] ECR II‑1357, paragraphs 95, 97 and 98).

86 Microsoft, citing by way of example Case T‑62/98 Volkswagen v Commission [2000] ECR II‑2707, paragraph 43, responds that the Community Courts do not refrain from ‘conducting searching inquiries into the soundness of the Commission’s decisions, even in complex cases’.

87 The Court observes that it follows from consistent case-law that, although as a general rule the Community Courts undertake a comprehensive review of the question as to whether or not the conditions for the application of the competition rules are met, their review of complex economic appraisals made by the Commission is necessarily limited to checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers (Case T‑65/96 Kish Glass v Commission [2000] ECR II‑1885, paragraph 64, upheld on appeal by order of the Court of Justice in Case C‑241/00 P Kish Glass v Commission [2001] ECR I‑7759; see also, to that effect, with respect to Article 81 EC, Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 34, and Joined Cases 142/84 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487, paragraph 62).

88 Likewise, in so far as the Commission’s decision is the result of complex technical appraisals, those appraisals are in principle subject to only limited review by the Court, which means that the Community Courts cannot substitute their own assessment of matters of fact for the Commission’s (see, as regards a decision adopted following complex appraisals in the medico-pharmacological sphere, order of the President of the Court of Justice in Case C‑459/00 P(R) Commission v Trenker [2001] ECR I‑2823, paragraphs 82 and 83; see also, to that effect, Case C‑120/97 Upjohn [1999] ECR I‑223, paragraph 34 and the case-law cited; Case T‑179/00 A. Menarini v Commission [2002] ECR II‑2879, paragraphs 44 and 45; and Case T‑13/99 Pfizer Animal Health v Council [2002] ECR II‑3305, paragraph 323).

89 However, while the Community Courts recognise that the Commission has a margin of appreciation in economic or technical matters, that does not mean that they must decline to review the Commission’s interpretation of economic or technical data. The Community Courts must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it (see, to that effect, concerning merger control, Case C‑12/03 P Commission v Tetra Laval [2005] ECR I‑987, paragraph 39).

90 It is in the light of those principles that the Court must examine the various pleas which Microsoft puts forward in support of its application for annulment of the contested decision.

2. Admissibility of the content of certain annexes

91 The Commission, supported on this point by SIIA, claims that in a number of annexes to the application and to the reply Microsoft relies on arguments not found in the actual body of those pleadings. On various occasions, moreover, Microsoft makes a general reference to reports annexed to its pleadings. The Commission further criticises the fact that certain expert opinions produced by Microsoft are based on information to which neither the Commission nor the Court had access, and contends that the Court cannot take account of those arguments, reports or expert opinions.

92 Microsoft asserts that the ‘relevant passages of [the] application’ contain the essential matters of fact and of law on which the action is based. According to the case-law, specific points in the text of the application can be supported and completed by references to specific passages in documents attached (order in T‑56/92 Koelman v Commission [1993] ECR II‑1267, paragraph 21). Furthermore, the applicant submits that it took a deliberate decision to limit the number of annexes as it did not wish to make the file too bulky, that it is under no obligation to submit every document referred to in the footnotes in its annexes, that the Commission has copies of all the documents lodged during the administrative procedure and that it cannot be disputed that Microsoft is entitled to provide information to its experts.

93 At the informal meeting of 10 March 2006 (see paragraph 70 above), the Judge-Rapporteur drew Microsoft’s attention to the fact that in certain annexes to its pleadings it seemed to rely on arguments not expressly set out in the actual body of those pleadings and questioned Microsoft on that point. As recorded in the minutes of that meeting, Microsoft replied that it was not ‘claiming reliance on arguments … which would not be expressly referred to in the application or in the reply’.

94 The Court recalls that, under Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the Court of First Instance, each application is required to state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based. According to consistent case-law it is necessary, for an action to be admissible, that the basic matters of law and fact relied on be indicated, at least in summary form, coherently and intelligibly in the application itself. Whilst the body of the application may be supported and supplemented on specific points by references to extracts from documents annexed thereto, a general reference to other documents, even those annexed to the application, cannot make up for the absence of the essential arguments in law which, in accordance with the abovementioned provisions, must appear in the application (Case C‑52/90 Commission v Denmark [1992] ECR I‑2187, paragraph 17; orders in Koelman v Commission, paragraph 92 above, paragraph 21, and Case T‑154/98 Asia Motor France and Others v Commission [1999] ECR II‑1703, paragraph 49). Furthermore, it is not for the Court to seek and identify in the annexes the pleas and arguments on which it may consider the action to be based, since the annexes have a purely evidential and instrumental function (Case T‑84/96 Cipeke v Commission [1997] ECR II‑2081, paragraph 34, and Case T‑231/99 Joynson v Commission [2002] ECR II‑2085, paragraph 154).

95 That interpretation of Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the Court of First Instance also applies to the conditions for admissibility of a reply, which according to Article 47(1) of the Rules of Procedure is intended to supplement the application (see, to that effect, Joined Cases T‑305/94 to T‑307/94, T‑313/94 to T‑316/94, T‑318/94, T‑325/94, T‑328/94, T‑329/94 and T‑335/94 Limburgse Vinyl Maatschappij and Others v Commission [1999] ECR II‑931, paragraph 40, not set aside on that point by the Court of Justice, on appeal, in Joined Cases C‑238/99 P, C‑244/99 P, C‑245/99 P, C‑247/99 P, C‑250/99 P to C‑252/99 P and C‑254/99 P Limburgse Vinyl Maatschappij and Others v Commission [2002] ECR I‑8375).

96 In the present case, the Court finds that in a number of documents annexed to the application and the reply, Microsoft puts forward legal or economic arguments not limited to supporting or supplementing matters of fact or of law expressly set out in the body of those procedural documents, but which introduce fresh arguments.

97 Furthermore, on a number of occasions Microsoft supplements the text of the application and of the reply on specific points by references to attached documents. However, certain of those references to an attached document are in general terms and therefore do not permit the Court to identify precisely the arguments that might be regarded as supplementing the pleas in law developed in the application or in the reply.

98 The Court notes, however, that while the Commission considers that there is no need to take account of the developments in those various annexes, it none the less comments on those developments in notes annexed to its own pleadings.

99 In accordance with the case-law referred to at paragraphs 94 and 95 above and with Microsoft’s statement at the informal meeting of 10 March 2006 (see paragraph 93 above), the annexes referred to at paragraphs 96 to 98 above will be taken into consideration by the Court only in so far as they support or supplement pleas or arguments expressly set out by Microsoft or the Commission in the body of their pleadings and in so far as it is possible for the Court to determine precisely what are the matters they contain that support or supplement those pleas or arguments.

100 As regards the Commission’s criticisms of the fact that Microsoft has not provided the information underlying certain expert opinions attached to its pleadings, it is sufficient to state that it is for the Court to appraise, where necessary, whether the assertions in those opinions are without probative value. If, in the absence of access to certain information, the Court should consider that those assertions do not have sufficient probative value, it will not take them into account.

B – The refusal to supply and to authorise the use of interoperability information

101 In this first issue, Microsoft relies on a single plea alleging infringement of Article 82 EC. This plea may be broken down into three parts. In the first part, Microsoft claims that the criteria which permit an undertaking in a dominant position to be compelled to grant a licence, as defined by the Community judicature, are not satisfied in this case. In the second part, Microsoft claims that Sun did not request access to the ‘technology’ that the Commission ordered Microsoft to disclose and that the letter of 6 October 1998 cannot in any event be interpreted as containing an actual refusal on its part. Last, in the third part, Microsoft claims that the Commission does not properly take account of the obligations imposed on the Communities by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of 15 April 1994 (Annex 1 C to the Agreement Establishing the World Trade Organisation (WTO)) (‘the TRIPS Agreement’).

1. First part: the criteria on which an undertaking in a dominant position may be compelled to grant a licence, as defined by the Community judicature, are not satisfied in the present case

a) Introduction

102 It may be useful first in this place to give a general outline of the positions taken by the main parties on the issue of the refusal to supply and authorise the use of interoperability information.

103 According to the contested decision, Microsoft abused its dominant position on the client PC operating systems market by refusing, first, to supply Sun and other competitors with the specifications for protocols implemented in Windows work group server operating systems and used by the servers running those systems to deliver file and print services and group and user administration services to Windows work group networks and, second, to allow those various undertakings to use those specifications in order to develop and market work group server operating systems.

104 The Commission contends that the information to which Microsoft refuses access is interoperability information within the meaning of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ 1991 L 122, p. 42). It claims, in particular, that that directive envisages interoperability between two software products as being the ability for them to exchange information and mutually to use that information in order to allow each of those software products to operate in all the ways contemplated (see, in particular, paragraph 256 of the first statement of objections, paragraph 79 of the second statement of objections and paragraph 143 of the third statement of objections). The Commission maintains that the concept of interoperability which Microsoft advocates is inaccurate (recitals 749 to 763 to the contested decision).

105 The Commission finds, on the basis of a series of factual and technical factors, that ‘the proper functioning of a Windows work group network relies on an architecture of client/server and server/server interconnections and interactions, which ensures a transparent access to the core work group server services (for Windows 2000/Windows 2003, this “Windows domain architecture” can be termed an “Active Directory domain architecture”)’ and that ‘[t]he common ability to be part of that architecture is an element of compatibility between Windows client PCs and Windows work group servers’ (recital 182 to the contested decision). The Commission describes that compatibility in terms of ‘interoperability with the Windows domain architecture’ (recital 182 to the contested decision) and maintains that such interoperability is ‘necessary for a work group server operating system vendor in order to viably stay on the market’ (recital 779 to the contested decision).

106 The Commission further contends that in order that Microsoft’s competitors can develop work group server operating systems capable of achieving such a degree of interoperability when the servers on which they are installed are added to a Windows work group, it is essential that they have access to information relating to interoperability with the Windows domain architecture (recitals 183 and 184 to the contested decision). It maintains, in particular, that none of the five methods described by Microsoft of ensuring interoperability between operating systems supplied by different vendors constitutes a sufficient substitute for the disclosure of that information (recitals 666 to 687 to the contested decision).

107 Last, the Commission asserts that, according to the case-law, while undertakings are, as a rule, free to choose their business partners, under certain circumstances a refusal to supply by an undertaking in a dominant position may constitute an abuse of a dominant position within the meaning of Article 82 EC. It maintains that the present case presents a number of ‘exceptional circumstances’ which show that Microsoft’s refusal to supply was an abuse, even on the strictest hypothesis – and therefore the one most favourable to Microsoft – that the refusal is regarded as a refusal to supply to third parties a licence relating to intellectual property rights (recitals 190 and 546 to 559 to the contested decision). The Commission maintains that it is entitled to take account of ‘exceptional circumstances’ other than those identified by the Court of Justice in Joined Cases C‑241/91 P and C‑242/91 P RTE and ITP v Commission [1995] ECR I‑743 (‘Magill’) and approved by the Court of Justice Case C‑418/01 IMS Health [2004] ECR I‑5039, but that in any event those exceptional circumstances are present in this case.

108 Microsoft has argued since the beginning of the administrative procedure that the concept of interoperability employed by the Commission in the present case is not consistent with the concept of ‘full interoperability’ envisaged by Directive 91/250 and that it does not correspond to the way in which undertakings organise their computer networks in practice (see, in particular, paragraphs 151 to 157 of the response of 16 November 2001 to the second statement of objections and pages 29 and 30 of the response of 17 October 2003 to the third statement of objections). It claims, in particular, that ‘full interoperability is available to a developer of server operating systems when all the functionality of his program can be accessed from a Windows client operating system’ (paragraph 143 of the response of 17 November 2000 to the first statement of objections; see also, to the same effect, pages 29 and 63 of the response of 17 October 2003 to the third statement of objections). Microsoft thus adopts what the Commission describes as a ‘one-way’ definition, whereas the Commission relies on a ‘two-way relationship’ (recital 758 to the contested decision).

109 In Microsoft’s submission, the full interoperability referred to above may be achieved through the disclosure of interface information which it already provides, notably by its ‘MSDN’ product or the conferences which it organises for ‘Professional Developers’ or through certain other methods available on the market (see, in particular, paragraphs 12, 57 to 63, 73 to 83 and 147 of the response of 17 November 2000 to the first statement of objections; paragraphs 6, 72, 94 to 96, 148 and 149 of the response of 16 November 2001 to the second statement of objections; and page 31 of the response of 17 October 2003 to the third statement of objections).

110 Microsoft claims that the Commission’s concept of interoperability means, on the other hand, that its competitors’ operating systems must function in every respect as a Windows server operating system. That situation could be achieved only if those competitors were allowed to ‘clone’ its products, or some of their features, and if information on the internal mechanisms of its products were communicated to those competitors (see, in particular, paragraphs 7, 20, 27, 144 to 150 and 154 to 169 of the response of 17 November 2000 to the first statement of objections; paragraphs 158 to 161 of the response of 16 November 2001 to the second statement of objections; and pages 10 and 20 of the response of 17 October 2003 to the third statement of objections).

111 Microsoft maintains that a requirement that it disclose such information would amount to an interference with the free exercise of its intellectual property rights and with its incentive to innovate (see, in particular, paragraphs 162, 163 and 176 of the response of 16 November 2001 to the second statement of objections and pages 3, 10 and 11 of the response of 17 October 2003 to the third statement of objections).

112 Last, Microsoft submits that the present case must be appraised in the light of Magill and IMS Health, paragraph 107 above, since the refusal must be analysed as a refusal to grant third parties a licence relating to intellectual property rights and because, accordingly, the contested decision implies compulsory licensing. It maintains, however, that none of the criteria which in its submission were exhaustively accepted by the Court of Justice in those judgments is satisfied in the present case. Microsoft concludes that the refusal at issue cannot be characterised as abusive and that the Commission cannot therefore order it to disclose the interoperability information. In the alternative, Microsoft relies on Case C‑7/97 Bronner [1998] ECR I‑7791 and submits that the criteria laid down in that judgment are not satisfied in the present case either.

113 In the second place, it is appropriate to describe the way in which Microsoft structures its argument in the first part of the plea and the way in which the Court will examine that argument.

114 Thus, before developing its actual reasoning (see title (d) of the first part, below), Microsoft puts forward a number of considerations concerning interoperability, which may be summarised as follows. First, it claims that there are five methods of achieving interoperability between Windows client PC and server operating systems and competing server operating systems. Second, it criticises the degree of interoperability required by the Commission in the present case (and claims, in essence, that the Commission’s real intention is to allow Microsoft’s competitors to ‘clone’ its own products or certain of their features) and also the scope of the remedy prescribed in Article 5 of the contested decision.

115 In addition to those various considerations, Microsoft puts forward a series of arguments in order to demonstrate that the communication protocols which it is required to disclose to its competitors pursuant to the contested decision are technologically innovative and that those protocols, or their specifications, are covered by intellectual property rights.

116 Microsoft’s actual reasoning in the first part of this plea may be set out as follows:

– the present case must be appraised in the light of the various circumstances recognised by the Court of Justice in Magill, paragraph 107 above, and approved in IMS Health, paragraph 107 above;

– the circumstances in which a refusal by an undertaking in a dominant position to grant third parties a licence covering intellectual property rights may be characterised as abusive are, first, where the product or service concerned is indispensable for carrying on a particular business; second, where the refusal is liable to exclude all competition on a secondary market; third, where the refusal prevents the emergence of a new product for which there is potential consumer demand; and, fourth, where the refusal is not objectively justified;

– none of those four circumstances is present in this case;

– as a subsidiary point, the criteria applicable are those recognised by the Court of Justice in Bronner, paragraph 112 above, which correspond to the first, second and fourth circumstances referred to above and identified in Magill and IMS Health, paragraph 107 above;

– nor, accordingly, is any of the three Bronner criteria, paragraph 112 above, satisfied in the present case.

117 The Court will begin by examining Microsoft’s allegations concerning the varying degrees of interoperability and the scope of the remedy prescribed in Article 5 of the contested decision. The applicant’s arguments relating to the existence of five methods of achieving interoperability between its operating systems and its competitors’ systems will be analysed when the Court examines what is claimed to be the indispensable nature of the interoperability information. The Court will then deal with Microsoft’s arguments concerning the intellectual property rights which in its submission cover its communication protocols or the specifications for those protocols. Finally, the Court will appraise the actual reasoning which Microsoft develops in the first part of the plea and determine, first, the circumstances by reference to which Microsoft’s impugned conduct must be analysed and, second, whether those circumstances are present in this case.

b) The varying degrees of interoperability and the scope of the remedy prescribed in Article 5 of the contested decision

Arguments of the parties

118 Microsoft maintains, in essence, that the concept of interoperability on which the Commission bases its conclusion that the refusal to supply interoperability information constitutes an abuse of a dominant position and which serves as the basis for the remedy prescribed in Article 5 of the contested decision is incorrect.

119 Microsoft emphasises that ‘interoperability occurs along a continuum’ and that ‘it is not an absolute standard’.

120 While ‘[t]here may well be a minimum level of interoperability that is required for effective competition’, that level is not difficult to achieve and there are various ways to achieve interoperability in the sense of ‘having operating systems supplied by different vendors work well together’.

121 Microsoft contends that in the contested decision the Commission adopts a wholly different concept of interoperability from the one set out in Directive 91/250 and used in practice by undertakings when they organise their computer networks. The Commission imagines that it is possible for a server operating system produced by one of Microsoft’s competitors to ‘function in all respects’ like a Windows server operating system (that is to say, to achieve ‘perfect substitutability’ or ‘plug replaceability’). In fact, that level of interoperability could be achieved only if Microsoft’s competitors were authorised to ‘clone’ its products or certain features of those products. Two server operating systems are able to interoperate in the sense of exchanging information with each other or providing services to each other without necessarily having to be ‘exactly the same’. It is thus important to distinguish the concept of ‘interoperability’ from the concepts of ‘cloning’ or ‘duplication’.

122 In support of its assertions, Microsoft refers to a report by two computer experts which it had attached to its response of 16 November 2001 to the second statement of objections, in which those experts explain the concepts of ‘tight coupling’ and ‘loose coupling’ and also explain why efforts to achieve ‘tight coupling’ with software products from different designers have failed (annex A.9.2 to the application). Those efforts have failed for both technical and business reasons.

123 Microsoft also states that during the administrative procedure it produced 50 statements from undertakings, both public and private, operating in all industry sectors and from what were then the various Member States. In their statements, those undertakings attest to the high level of interoperability between Windows client and server operating systems and its competitors’ server operating systems, due to the use of methods already available on the market. Furthermore, the Mercer reports show that an undertaking’s choice of server operating system is not dictated by concerns about interoperability with Windows client and server operating systems.

124 In the reply, when introducing the reasoning designed to show that its communication protocols are protected by intellectual property rights, and also in its answer to one of the written questions put to it by the Court, Microsoft makes a series of allegations concerning the scope of the remedy prescribed in Article 5 of the contested decision. By those allegations, Microsoft also raises the question of the level of interoperability required by the Commission in the present case.

125 Thus, in the reply, Microsoft claims that there is an inconsistency between the remedy and the ‘standard of interoperability’ employed by the Commission in the contested decision for the purpose of assessing the relevance of the ‘alternative means of interoperability’. In its answer to one of the written questions put by the Court, Microsoft asserts that the scope of the disclosure obligation prescribed by Article 5 of the contested decision has been given different interpretations by the Commission.

126 On that last point, Microsoft observes that, at recital 669 to the contested decision, the Commission states that ‘open industry standards fall short of enabling competitors to achieve the same degree of interoperability with the Windows domain architecture as Windows work group server operating systems do’. Microsoft also observes that, at recital 679 to the contested decision, the Commission states that ‘Novell’s “clientless” work group server operating systems cannot use the full capabilities of the Windows client PCs and work group servers in the same way that [Windows] work group server operating systems can’. Microsoft concludes from those statements that the Commission initially envisaged interoperability as being the capability for its competitors to make their products work in exactly the same way as Windows server operating systems. The Commission thus envisages that there be a quasi identity between Windows server operating systems and its competitors’ server operating systems.

127 In order for the degree of interoperability thus advocated by the Commission to be achieved (a degree which Microsoft refers to variously as ‘plug replacement’, ‘plug-replaceability’, ‘drop-in’, ‘functional equivalent’ and ‘functional clone’), Microsoft would have to disclose much more information than that referred to in Article 5 of the contested decision, notably information on the internal mechanisms of its server operating systems (including ‘algorithms and decision rules’).

128 Microsoft submits that the Commission adopted a second approach and advocated a narrow interpretation of Article 5, taking the view that that article required the applicant to license to its competitors only ‘on the wire’ communication protocols. In support of that assertion, Microsoft relies on the fact that at the hearing in the interim measures proceedings the parties which had then been granted leave to intervene in support of the form of order sought by the Commission stated that they were not interested in obtaining access to information about the internal mechanisms of the Windows server operating systems. Furthermore, the Commission confirmed in the defence and the rejoinder that it did not propose to allow Microsoft’s competitors to ‘clone’ the file and print services or group and user administration services delivered by the Windows server operating systems. However, the thousands of pages of specifications which Microsoft communicated to the Commission pursuant to the contested decision will none the less allow its competitors to copy certain ‘features’ of its products that it developed through its own research and development efforts. Thus, for example, by having access to the DRS (Directory Replication Service) protocol, third parties would be able to reverse-engineer other parts of the Windows server operating system that use Active Directory.

129 Taking a third approach, in October 2005, and thus several months after the closure of the written procedure in the present case, the Commission again interpreted Article 5 of the contested decision as meaning that the information that Microsoft was to disclose must allow its competitors to create ‘functional equivalents’ of the Windows server operating systems or, in other words, systems that were ‘perfectly substitutable’ for those systems. Microsoft again asserts that such an interpretation of Article 5 requires that it give access to information on the internal mechanisms of its Windows server operating systems.

130 At the hearing, Microsoft discussed the ‘multimaster replication’ mechanism at length and, in that context, submitted arguments to the same effect as those set out above.

131 Microsoft explained that in the past directory services were executed by a single server which was very large and very expensive. Nowadays those services are generally carried out by a multitude of small, less expensive servers situated in different places and linked in an ensemble which Microsoft illustrated on various slides shown at the hearing by a ‘blue bubble’. Microso