European Commission clears Microsoft's Nokia purchase

The EU has approved Microsoft's planned purchase of Nokia's mobile devices and services business.
Written by Mary Jo Foley, Senior Contributing Editor

The European Commission has given Microsoft's planned acquisition of Nokia's mobile device business the green light.


In a press release dated December 4, the Commission said it had investigated potential compeition concerns and found none.

"The Commission concluded that the transaction would not raise any competition concerns, in particular because there are only modest overlaps between the parties' activities and the links between Microsoft's mobile operating systems, mobile applications and enterprise mail server software with Nokia's smart mobile devices are unlikely to lead to competitors being shut out from the market," said the press release.

"In 2012, almost 700 million smartphones and 162 million tablets were sold worldwide. The Commission assessed the effects of the acquisition on competition in the field of smart mobile devices (including smartphones and tablets). The Commission found that the overlap of the two companies' activities in this area is minimal and several strong rivals, such as Samsung and Apple will continue to compete with the merged entity," the release added.

The Commission investigated a number of the "vertical relationships" between a combined Microsoft-Nokia in the smart mobile device and mobile operating system, applications, enterprise mail server software and related communications protocols. They seemingly found no cause for alarm, as Microsoft's market share in the mobile OS space is "limited." Microsoft is expected to need to continue to rely on third party device suppliers to compete with Android and Apple's platform, the Commission said.

"Microsoft is unlikely to restrict the supply of its mobile apps, such as its Office suite apps and its communication app Skype, to competing providers of smart mobile devices," the Commission added. "Since Office apps are currently not available on tablets running third party OSs, a potential supply restriction would be limited to other tablet suppliers using Microsoft's Windows OSs. However, this strategy would hamper Microsoft's interest to attract more app developers and ultimately users to its OSs for smart mobile devices. For smartphones, the share of Office apps is minimal and there are many popular competing apps. Similarly, with regard to Skype, other popular apps continue to be available. Moreover, given the low market share of Windows in mobile OSs, limiting interoperability with third-party mobile OSs would ultimately weaken Skype's competitive offering."

The Commision also found that Microsoft wouldn't be able to restrict the interoperability of competing smart mobile devices with Exchange Server "because of the contractual terms of their current licenses to Microsoft patents covering the communication protocol that manages synchronisation of email, calendar and contacts between smart mobile devices and Microsoft Exchange."

"The Commission considers that any possible competition concerns, which might arise from the conduct of Nokia, following the transaction, in the licensing of the patent portfolio for smart mobile devices which it has retained falls outside the scope of the EU Merger Regulation," the release noted.

"We look forward to the date when our partners at Nokia will become members of the Microsoft family, and are pleased that the European Commission has cleared the deal without conditions," said a Microsoft spokesperson.

Earlier this week, the U.S. Department of Justice gave its approval to the pending Microsoft-Nokia acquisition.

Microsoft went public with plans to buy Nokia's devices and services business, plus license a number of its patents, for $7.2 billion in September. Microsoft officials have said they expect the transaction to be completed around the first quarter of 2014.

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