October 7, 2011 10:52 pm

EU clears Microsoft’s $8.5bn deal with Skype

The European Union on Friday cleared Microsoft’s planned acquisition of Skype, removing the most significant hurdle still remaining in the way of the $8.5bn deal.

The purchase was the subject of criticism from rivals who complained that it would enable Microsoft to use its PC software monopoly to dominate internet communications – an echo of the argument over “bundling” of software that led to earlier European action against the company.

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Announcing its decision, which the Financial Times reported earlier in the week, the European Commission hinted that it had not investigated issues of vertical integration such as bundling.

Instead, it studied the more traditional antitrust issue of whether a combination with Skype would reduce the number of online communication services available to consumers.

“The parties’ activities mainly overlap for video communications, where Microsoft is active through its Windows Live Messenger,” it said. “However, the Commission considers that there are no competition concerns in this growing market where numerous players, including Google, are present.”

Following clearance of the deal in the US, Brad Smith, Microsoft’s general counsel, called the EU approval “an important milestone” and said the company expected to complete the final steps soon. It still faces regulatory reviews in Russia, Ukraine, Serbia and Taiwan.

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