Cisco takes on 'unfair' Microsoft-Skype deal at EU court

Summary:Should the second-highest court in the EU rule in Cisco's favor on the Microsoft-Skype deal, the two companies would have to be separated. But only if the court found the European Commission failed to investigate properly the first time around.

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Image: via CNET

Should Cisco get its way at the second-highest court in the EU, Microsoft may be forced to annul its acquisition of Skype.

But the chances of the $8.5 billion deal between Microsoft and Skype unravelling are slim, according to sources speaking to ZDNet on Thursday. 

Cisco filed a complaint at the Luxembourg-based EU General Court in February 2012 arguing that the buyout should not have gone ahead for a multitude of reasons. Crucially, the networking firm says the Commission made a number of "manifest errors" that led to the deal being approved without Microsoft having to make any concessions that might have benefited — or at least lessened the blow for — its rivals.

This, Cisco argues, gives the Redmond, Wash.-based company a monopoly over the video and voice communications sector.

The company doesn't want the court to annul the deal, according to previously-filed court documents: "All we want is interoperability," said Cisco chief executive John Chambers on CNBC on Wednesday, adding that such protocol sharing "allows the Internet to grow."

The General Court may annul the deal anyway if it rules in Cisco's favor.

One official at the European Commission, who did not want to be named, said the European Court of Justice, which could take on the case should Microsoft lose the case and appeal the General Court's decision, often sides with the decision made by the Commission in the first place.

However, there is some wiggle room for the court to maneuver, hinting that while the deal may not be annulled, Microsoft may not walk away scot-free.

Cisco's argument hinges on the premise that the Commission failed to properly investigate the acquisition before the deal closed in 2012, which "condemned" its competitors to a "niche," according to a Reuters account of the court proceedings.

Cisco argues that Microsoft is not a direct competitor. That said, Cisco's communications business remains flat year-over-year, but it has been offset by a much-needed boon to its mobile business, which only two years ago was crumbling around the company's feet.

The case is currently under way in Luxembourg, and is not expected to be ruled on until August or September.

Topics: Microsoft, EU

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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