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

January 2005

World Competition

This article provides an economic analysis of the European Commission's decision against Microsoft's refusal to supply information on interoperability. 

It surveys the exceptional circumstances examined by the Commission in applying the essential facility doctrine to the case. It analyses the amount Microsoft can request as reasonable remuneration for the licensing of its property rights on interface. According to the author, the analysis of incentive to innovate, as proposed by the Commission, provides a sounder test for ordering compulsory licensing than  the new product condition introduced in Magill.

However, the author points out that the assessment of incentives to innovate in the whole industry cannot be conclusive in the absence of more guidance on what constitutes a reasonable, non discriminatory and non strategic license. Regarding leveraging, the author considers that the Commission proposes a convincing story. Prejudice to consumers remains however hypothetical.  

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