In Bronner the Court of Justice made it clear that the condition of indispensability requires that it should be undisputed that for the requesting party there is no other available substitutes, including those disadvantageous alternatives; moreover it should be proved that there are “technical, legal or even economic obstacles capable of making it impossible, or even unreasonably difficult, for any other undertaking alone or in cooperation to potentially establish a substitute”.24 This test at the outset requires that access to the intellectual property requested
is the only choice for any existing operator or potential entrant to be a viable competitor. Accordingly, it is an objective test that does not base on the perspective of the requesting party, but on the standpoint of the dominant undertaking that is expected to be aware of what is indispensable in the downstream market.25 Secondly, indispensability in this context, as other
two exceptional circumstances in the ‘exceptional circumstances test’– elimination of the competition on the downstream market, and novelty of a new/innovative product – is a question of degree. For instance, necessity of the intellectual property requested, to a certain extent, depends on how to interpret the new product condition: if the new product condition is narrowly interpreted as in Magill and IMS Health, consequently a higher standard of indispensability shall be applied; if the new product condition is extensively interpreted in the sense that a more attractive product with improvements in certain features is sufficient as in
Microsoft (see the section ‘new product condition’ below), indispensability condition would be
fulfilled if the input could increase the appeal of the competitors’ (proposed) products and failure to supply the input would place the competitors at a disadvantage.26
Microsoft maintained that information requested was not indispensable for the reason that the
22 Judgment in Microsoft v Commission, ECLI: EU: T: 2007: 289, Para 651-656. 23 ibid, Para 332.
24 Judgment in Oscar Bronner, C-7/97, ECLI:EU:C:1998:264, Para 44.
25 ibid, Para 44-46. John Temple Lang, ‘The Principle of Essential Facilities in European Community Competition
Law – the Position since Bronner’ (2000) 1 Journal of Network Industries 375, p380.
26 Thomas Eilmansberger, ‘The Essential Facilities Doctrine under Art. 82: What is the State of Affairs after IMS
128
interoperability between non-Microsoft server systems and Windows client PC system, as well as between non-Microsoft servers and Microsoft servers could be achieved via other different methods other than via disclosure of the communication protocols in question. Though not as ideal as access to the interoperability information directly, by using them it was still possible to achieve the “minimum level of interoperability” which enabled different systems to work together.27 Microsoft demonstrated the feasibility of these methods in practice with the
example of Linux. According to Microsoft, the market share of Linux increased on the market for workgroup server operation systems without the possession of the communication protocols requested in this case.28 The Commission responded that first of all the significant role itself
played by the interoperability information linking the market for PC operating systems and the market for the workgroup server operating systems, and the strong market power of Microsoft on the former market, gave rise to the indispensability of its communication protocols.29 Then
on the test of indispensability the Commission declared that in the first place, the degree of interoperability information disclosed should be to such an extent that is capable of making a competitor be a “viable competitive constraint” rather as a de minimis player as claimed by Microsoft.30 In the second place, the fact that the competitors of Microsoft on the market for
workgroup server systems had not yet been entirely eliminated did not indicate that the indispensability condition was not satisfied.31 In the third place, according to the Commission,
the five alternative methods put forward by Microsoft were not viable substitutes.32
The General Court agreed with Commission’s finding that indispensability of the interface information was mainly due to Microsoft’s quasi-monopoly position on the market for PC operating systems, which enabled Microsoft to determine the linking rules at the interface of two markets independently of its competitors.33 The Court supported the Commission that
other alternatives were not effective enough to achieve the high degree of interoperability as what could have been reached by the disclosure of the information at issue.34 According to the
Commission and General Court, any possible solution would not be considered as an alternative under Article 102 TFEU as long as they were not as effective and efficient as the
27 Judgment in Microsoft v Commission, ECLI: EU: T: 2007: 289, Para 345. 28 ibid, Para 347. 29 ibid, Para 353. 30 ibid, Para 355. 31 ibid, Para 360. 32 ibid, Para 362. 33 ibid, Para 386- 392. 34 ibid, Para 435.
129
interface information requested.35 In this regard, it has been contended that, in consideration of
the potentially significant impact of a compulsory license on the incentives to invest and to innovate, the Court should have taken a closer look at the possible alternatives.36
In determining the degree of interoperability that Microsoft was expected to provide to its competitors, the Commission and the Court did not explicate why they preferred including also the interaction between server-server rather than protecting only server-client interaction.37
Protection of the server-server interaction implies that even the competition in the market and incremental innovation are pursued; while the competition for the market and breakthrough innovation are encouraged if the degree of interoperability only requires the server-client interaction.38 It demonstrates the interventionist stance held by both of the Commission and the
Court, by applying a higher standard of interoperability – including the server-client and server-server interaction, accordingly a lower standard of indispensability. However, such a lower standard, which assumes an indispensable input too readily and places the right owner under constant pressure, particularly in the dynamically competitive industries, might be problematic since these industries change quickly and dramatically.39