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Competition

EU court strikes down Cisco complaint against Microsoft-Skype merger

Europe’s second highest court has finally cleared the 2011 takeover of the Internet telephony provider Skype by Microsoft. US software company Cisco challenged an earlier decision by EU regulators approving the merger.

On Wednesday, the EU's General Court upheld a decision by European regulators clearing Microsoft's merger with Skype in 2011.

Based in Luxembourg, the EU's second highest court rejected a legal challenge against the merger brought by the US-based network equipment maker Cisco Systems. Cisco argued that Microsoft's acquisition of the Internet telephony and video provider would create a monopoly, and that the EU's executive commission had been wrong to approve the $8.5 billion (6.1 billion euros) takeover.

The EU court ruled that Cisco had failed to show that the acquisition would harm competition, adding: “The merger doesn't restrict competition either on the consumer video communications market or on the business video communications market.”

The judges also argued that Skype users could switch to other Internet-based video and telephony services if Microsoft were to raise prices in a sector that was rapidly changing.

The litigants are fierce rivals, especially in the market for business video communications. Cisco's TelePresence product is a leader, but has come under pressure from Microsoft's Lync application.

Cisco filed its challenge together with another competitor, Italy's fixed-line and Internet telephone provider Messagenet. The two companies have the chance to appeal the ruling in the European Court of Justice, which is the EU's highest judicial body.

uhe/mkg (Reuters, dpa)