SC admits unfair trade appeal against Microsoft

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jan 29 2013, 09:14am hrs
The Supreme Court on Monday admitted an appeal alleging that Microsoft abused its dominant position as a market leader in sale of software licences.

A bench headed by Justice GS Singhvi admitted the statutory appeal filed by Delhi-based law firm Singhania and Partners LLP alleging that Microsoft, with a market share of 90%, was abusing its dominant position by offering software licences for its Windows and Office software at a lower price to original equipment manufacturers (OEM) while business houses had to buy the same at higher prices from the manufacturer.

It challenged the Competition Appellate Tribunal's order that upheld the fair trade regulator Competition Commission's ruling that Microsoft did not abuse its dominant position regarding sale of software licences. merely changing the label of the licences, though the end use of the licences is the same, the respondents (Microsoft) cannot create two different tie-up arrangements and charge substantially different prices for the licences in question.

By charging substantially different prices for differently labeled same product, the respondents are violating Section 3(4) of the Act (The Competition Act of 2002). The charging or substantially different price for differently labeled licences having same end use, is not a reasonable condition, as contemplated by Section 3(5) of the Act, the petition stated.

Earlier, antitrust watchdog Competition Commission of India (CCI) had rejected the law firm's appeal on June 22, 2011 due to lack of evidence, saying it did not find prima facie any substantial material against the claims that differential pricing strategy adopted by Microsoft raises competition issue.

The 2002 Act empowers CCI to look into complaints relating to anti-competitive agreements and abuse of dominant market position.

The firm claimed Microsoft product dealers sold both the licence versions to different customers as per the demand.

However, the software major forced the dealers to sell the more expensive licence to large customers. In case large customers wanted to buy the less expensive (almost half the price) OEM licence version of the two software, they were required to buy new computers also along with it.

The law firm said the Microsoft products Windows Vista and Microsoft Office 2007 that were sold in different licence versions (Volume Licence or OEM Licence) were identical products except for the cost.

There is no question of any denial of market access for the reasons stated by us earlier to the effect that respondent no 1 (Microsoft India) was quite justified in refusing to sell the OEM to the appellant, who was not the original equipment manufacturer. In short, we find no controversy of ... for that matter any other provisions of the Act, COMPAT said in its October order.