Microsoft ruling

The European Commission decision to censure Microsoft for anti-competitive practices is a timely fillip for the European project…

The European Commission decision to censure Microsoft for anti-competitive practices is a timely fillip for the European project, which in economic terms, has been floundering somewhat of late.

The actual competitive issues on which the Commission has ruled and the proposed remedies are not as important as the way in which it chose to deal with the matter. Rather than reach a pragmatic settlement with what is arguably the most powerful company in the world it made a ruling that Microsoft broke the law. In the process it laid down some important markers by which it expects the company to abide in future.

The decisiveness and cohesion which characterised Wednesday's actions by the Commission stand in contrast with most other attempts by Europe to act as one on economic issues. The Lisbon agenda of structural economic reforms intended to make Europe the world's most competitive economic bloc is to be discussed by the EU summit today in Brussels but has yet to deliver on these objectives. The European economy limps along, growing by an anaemic 1.5 per cent last year, while the US economy posted growth of 6 per cent.

The ruling also demonstrates once again the value to states such as this of being part of a wider economic alliance. It is hard, if not impossible, to imagine Microsoft being brought to heel by the Irish authorities. The ease with which the company has dealt with the various US states challenging its monopolistic actions - helped by a change of government in Washington - testifies to this.

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Equally, the revelation that Microsoft - which employs over 1,200 people here and contributes €350 million to the economy - actively lobbied both the Tánaiste and the Taoiseach on the issue, highlights the difficulties faced by small countries in regulating powerful multinational corporations.

As it stands there is no threat to Microsoft's operations here. The status quo is expected to be maintained pending the outcome of the various appeals being considered by Microsoft. It could be close to five years before the issue is finally settled and it should be borne in mind that the competition Commissioner, Mr Mario Monti, has a poor record of defending his big decisions when they are challenged in the courts.

In the meantime the company can be expected to continue to use its stranglehold on the market for the software that runs personal computers to achieve dominance in other emerging sectors. Wednesday may have been a good day for supporters of European economic integration, but it could still turn out to be a hollow victory.