09.08.11

Cablegate: Former Microsoft Lawyer Thomas Barnett and Majoras Butt Heads With EU Commission Over Microsoft Case

Posted in America, Antitrust, Europe at 4:08 am by Dr. Roy Schestowitz

Cablegate

Summary: Pressure from the US for Neelie Kroes et al. to leave Microsoft alone despite abusive behaviour

THE FOLLOWING Cablegate cable is interesting for several reasons. First of all, Deborah Platt Majoras, whom we wrote about before in a negative context (conflicts of interest, improper job handling, etc.) is seen defending Microsoft just like she let Intel off the hook despite crimes. More interesting, however, is Thomas Barnett appearing there. He is batting for Microsoft of course (we wrote about his professional relationship with Microsoft in the past). This is similar to those cables which show the US politicians pressuring the EU to approve Sun’s takeover, not quite respecting the independence of other parts of the world.


VZCZCXRO0066
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHPOD RUEHROV
DE RUEHBS #3241/01 2990952
ZNR UUUUU ZZH
P 260952Z OCT 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUEHKO/AMEMBASSY TOKYO
RUEHUL/AMEMBASSY SEOUL
UNCLAS SECTION 01 OF 02 BRUSSELS 003241 
 
SIPDIS 
 
DOC FOR DEFALCO 
FTC FOR JOHN PARISI 
DOJ FOR CALDWELL HARROP 
 
STATE FOR EUR/ERA, EB/IPE, EB/TPP/MTA 
 
PLEASE PASS TO USTR - DAVID WEINER 
 
SENSITIVE BUT UNCLASSIFIED - ENTIRE TEXT 
PROPRIETARY BUSINESS INFORMATION - PLEASE PROTECT ACCORDINGLY 
 
NOT FOR INTERNET DISTRIBUTION 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECIN, KIPR, ECPS, EINT, ETRD, EINV, ECON, EUN 
SUBJECT: FTC CHAIRMAN MAJORAS REVIEWS MICROSOFT CASE IMPACTS WITH 
BRUSSELS ATTORNEYS 
 
REF : USEU BRUSSELS 2933 
 
1.  SUMMARY.  FTC Chairman Majoras and Ambassador Gray reviewed U.S. 
and EU competition developments with nine prominent Brussels 
attorneys on Oct. 19.  The group focused on the EU victory in its 
antitrust case against Microsoft, but also covered pending EU cases 
against other tech firms.  Majoras and most participants agreed the 
Microsoft case underlines a strengthening divergence between U.S. 
and EU approaches to dominance cases.  Majoras discounted a theory 
that U.S. foreign and domestic political difficulties may have 
allowed the EU to assume global leadership on antitrust policy.  END 
SUMMARY. 
 
MAJORAS COVERS MICROSOFT WITH BRUSSELS ATTORNEYS 
--------------------------------------------- --- 
 
2.  Federal Trade Commission (FTC) Chairman Deborah Platt Majoras, 
in town for a European Competition Journal event, met for breakfast 
October 19 with nine of Brussels' leading competition policy 
attorneys.  Also attending for the USG were: U.S. Ambassador to the 
European Union C. Boyden Gray; Randall Long, Attorney-Advisor to 
Chairman Majoras; and Econoff (notetaker).  The attending attorneys 
and represented firms included: Ian Forrester, White and Case; 
Maurits Dolmans, Cleary Gottlieb; David Hull, Covington and Burling; 
Sven Volcker, WilmerHale; Stephen Kinsella, Sidley and Austin; 
Hendrik Bourgeois, GE; Jim Venit, Skadden Arps; David Wood, Gibson 
Dunn; and Thomas Vinje, Clifford Chance. 
 
3.  Ms. Majoras reviewed recent U.S. antitrust developments, noting 
a possible trend in U.S. courts to raise the bar for blocking 
mergers, but quickly turned to the situation in the EU.  She said 
she had conferred closely with Thomas Barnett, DOJ Assistant 
Attorney General for Antitrust, on potential implications of the 
recent European Court of First Instance (CFI) ruling upholding the 
European Commission's major 2004 antitrust decision against 
Microsoft (reftel).  Majoras noted that EU Competition Commissioner 
Neelie Kroes reacted strongly to the Barnett/DOJ statement on the 
CFI decision, which indicated "it could harm consumers and have a 
chilling effect on innovation." 
 
4.  Despite Kroes' sensitivity to criticism over the Microsoft case, 
Majoras continued, FTC and DOJ, as the two U.S. antitrust agencies, 
maintain good relations with their European counterparts.  She 
stressed the strength of her personal relationships, for example, 
with Commissioner Kroes and Director General of the Competition 
Directorate (DG COMP) Philip Lowe.  She pointed out that FTC and DOJ 
will have annual bilateral consultations in 10 days with the 
Commissioner, Lowe, and their staff. 
 
5.  Majoras said her concern centers on the increasing divergence, 
in her view, between the trends of U.S. and EU antitrust policies 
and court decisions in the area of single-firm conduct.  Even 
Microsoft opponents in the U.S., she underscored, are wondering if 
the outcome of the case will embolden the Commission to pursue more 
aggressively cases against other market-leading technology firms, 
most of whom are American.  Ambassador Gray noted the contrast 
between DG Competition's action against U.S. firms, and timidity in 
addressing the anti-competitive nature of aggressive Gazprom efforts 
to purchase EU gas distribution networks. 
 
U.S. AND EU DIFFER IN "CULTURAL APPROACHES" TO ANTITRUST 
--------------------------------------------- - 
 
6. Jim Venit of Skadden Arps agreed that it is striking that most of 
the Commission's cases against multinationals (Note: including 
existing antitrust cases against Intel, Rambus and Qualcomm, and an 
investigation of Apple.  End note.) involve U.S. firms.  He 
explained, however, that it is important to look at Commission 
actions in the context of the "cultural differences" across the 
Atlantic - a greater tradition of regulatory intervention in the EU 
as compared to the U.S.  This manifests itself in both Commission 
action and greater EU court eagerness to intervene, he said. 
 
 
BRUSSELS 00003241  002 OF 002 
 
 
7.  The best way to approach antitrust cases, Venit continued, would 
be to stand back and weigh the relative economic impacts of both 
alleged abuses and potential remedies.  Majoras agreed that this is 
important, but stressed that it is difficult to determine.  She 
noted that applying EU and U.S. antitrust laws pertaining to 
single-firm conduct (Article 82 of the EC Treaty and the relevant 
part - "Section 2" - of the U.S. Sherman Act, respectively) 
correctly is the hardest job for an antitrust enforcer.  It is a 
challenge to avoid both overenforcement and underenforcement, she 
concluded, and a jurisdiction's tolerance for one or the other 
determines the level of enforcement. 
 
8. David Wood of Gibson Dunn agreed with both Venit and Chairman 
Majoras, saying that the different cultural approach to antitrust in 
the EU underlies the divergence here from U.S. action.  Article 82, 
he noted, in looking at dominance cases, does not address how 
companies achieved monopoly status.  He contrasted the case of firms 
which came to dominate markets through innovation and business 
acumen, versus those arriving via privileged position as a 
state-owned firm.  The distinction is important in U.S. decisions on 
antitrust, he said. 
 
9.  Maurits Dolmans of Cleary Gottlieb (Note: who represents both 
IBM and Google, Microsoft opponents in its EU case. End note.) 
argued that the CFI ruling and 2004 Commission decision against 
Microsoft actually brings U.S. and EU law closer together, rather 
than representing a divergence.  He said the bases for the CFI 
decision closely resemble findings of the DC circuit court from the 
U.S. case against Microsoft several years ago.  He noted that EU 
competition law, in the form of Articles 81 and 82 of the founding 
EC Treaty, were written by a U.S. lawyer and based on the relevant 
Sections 1 and 2 of the FTC Act.  It is important to remember the 
similarities in legal bases, Dolmans said, and maintain a positive 
tone in responding to EU antitrust actions. 
 
MAJORAS DISAGREES THAT EU HAS ASSUMED ANTITRUST LEADERSHIP 
--------------------------------------------- -- 
 
10.  Ian Forrester of White and Case (Note: who has represented 
Microsoft in its EU case.  End note.) then asked Chairman Majoras 
her view of the theory, which he said is favored by some in 
Brussels, that political difficulties faced by the U.S. 
administration in foreign policy (e.g. Iraq) or domestically have 
weakened U.S. antitrust enforcement.  This, according to theory 
proponents, has allowed the EU to assume the mantle of antitrust 
leadership and let the EU set the global standard for antitrust 
actions. 
 
11.  Hendrik Bourgeois of GE agreed that this idea has taken root in 
Brussels, noting that a "senior DG COMP official" told him recently 
that the U.S. and EU are competing over antitrust policy - "and the 
EU is winning." 
 
12.  Majoras vigorously disputed the idea, saying that FTC under her 
tenure has initiated more merger cases (as a percentage of H-S-R 
filings) against firms than had the Clinton Administration. 
Moreover, Majoras emphasized that the number of cases brought is not 
as important as bringing analytically sound cases.  The Ambassador 
called the idea an "extraordinary," unfounded assertion.  Majoras 
added that the U.S. doesn't consider itself in competition with the 
EU over antitrust policy, but rather wants to continue dialogue to 
ensure that actions are in the best interest of consumers and firms. 
 Nearly all of the participants agreed that continued U.S.-EU 
dialogue is vital to prevent future problems. 
 
13.  FTC Chairman Majoras has cleared this cable. 
 
GRAY 


The emphases above are ours.

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