Regulator will be 'stricter' in monitoring commitments made to resolve competition concerns

The EU's Competition Commissioner Joaquín Almunia said that Microsoft's failure to comply with commitments the company had agreed to in 2009 had taught the regulator to "monitor companies more closely after we accept their commitments". Last week the Commission fined Microsoft €561 million over its failure to adhere to the 2009 commitments.

Microsoft had agreed to resolve concerns about its dominant position in the web browser market by displaying a screen to users of its Windows operating system that provided them with a choice over which browser to use. At the time the Commission had taken issue with the company tying its Internet Explorer browser to its near-universally used Windows system.

The company is obliged to display the browser-choice screen to users until late 2014, but the Commission found the software giant had failed to display the screen for a period of approximately 14 months spanning between May 2011 and July last year. Microsoft put the failing down to a "technical error".

Almunia confirmed that Microsoft had been left to report on its own compliance with the commitments the company had signed up to. However, he said that companies that make future commitments to resolve competition concerns will be subjected to "stricter" monitoring of their adherence to those agreements in light of the Microsoft case.

"Commitments must be crystal clear and self-executing," Almunia said. "When we accept them, we take a legally binding decision – and we take compliance with our decisions very seriously. We have several ways to monitor that companies keep their pledges. The starting points are often the companies’ reporting obligations and the vigilance of other market players. When needed, we can also use an independent trustee to help us verify that the companies keep their word. [In the Commission's decision on the Microsoft case] we saw what can happen when they don’t."

"This incident taught us that we should monitor companies more closely after we accept their commitments. In this case, because the commitment was straightforward, the monitoring was entrusted to the company itself, which was obliged to report on the implementation of the commitments. It did so, but erroneously. In the future we will be stricter in the design of our monitoring tools. An incident like this must not happen again," Almunia said.

Competition law specialist Alan Davis of Pinsent Masons, the law firm behind Out-Law.com, last week outlined his surprise at the Commission's decision not to require Microsoft to put in place a Monitoring Trustee in respect of the browser choice commitments.

"Regulators want to make sure that the commitments they have agreed with companies are being complied with, but the cost and time involved with monitoring that compliance is onerous," Davis said at the time of the Commission's ruling in the Microsoft case. "Regulators are therefore heavily reliant on reports submitted by companies themselves to assess that compliance, but in this case it is clear that there were failings with Microsoft's self-monitoring and self-reporting processes as the browser-choice error was not identified for 14 months."

"There was therefore a good case for the Commission to require Microsoft to appoint a Monitoring Trustee in this case at the time of the original commitments decision or going forward, and I would anticipate that the Commission will consider imposing such a requirement on other companies in similar cases in the future," he added.

Under EU law the Commission, in its role as regulator, can decide to accept legally binding commitments from companies to govern those firms' future behaviour and resolve competition concerns. The Commission said that it can be mutually beneficial for both it and companies to agree on commitments to resolve competition concerns.

"Both the companies and the Commission may have an interest in pursuing the commitment route," the Commission said in a statement. "Companies may want to avoid the impact of a prohibition decision on their reputations. They may also want to avoid a formal finding of an infringement against them."

"The Commission, on the other hand, may have an interest in addressing identified competition concerns in a swift and effective manner, thereby quickly restoring undistorted conditions of competition in the markets. The procedure for commitment decisions is generally shorter than for prohibition decisions," it added.