* Cisco asks Europe's second-highest court to annul EU
* Says EU Commission was wrong to approve creation of a
* Commission lawyer points to various rivals to Skype
* Case is one of several merger challenges at the Luxembourg
By Foo Yun Chee
LUXEMBOURG, May 29 Cisco Systems Inc,
the world's leading network equipment maker, asked an EU court
on Wednesday to annul the approval of Microsoft's
purchase of Skype, saying EU regulators were wrong to allow the
creation of a monopoly.
Cisco's challenge at the Luxembourg-based General Court
follows the European Commission's approval of the $8.5 billion
deal in 2011. Microsoft was not required to make any concessions
for buying the Internet video and voice messaging company, which
Cisco argues has given Microsoft/Skype an unfair advantage.
A third of the world's voice calls are now on Skype while
over 280 million users use the service more than 100 minutes
every month, Microsoft chief operating officer Kevin Turner said
in March. Skype had 170 million users at the time of the deal.
The case is important as Internet-based voice and video has
become a vast market, with many consumers and corporates
abandoning traditional fixed-line and mobile as a result, and is
an area in which Cisco had hoped to expand its presence.
The Microsoft acquisition "marked a tipping point in the
video communications market", Cisco's lawyer, Luis Ortiz Blanco,
told judges at Europe's second-highest court.
"The merger created an effective monopoly and condemned
comepttiors to a niche. The reasoning applied (by the
Commission) incurred numerous errors," he said.
Corneliu Hoedlmayr, a lawyer for the Commission, said
Cisco's arguments were unconvincing.
"The applicants have failed to provide evidence of
competitive harm," he told the court, citing the existence of
other rivals to Skype such as Google Talk and
Cyprus-based calling and messaging servicer Viber.
"Other technologies are emerging. If these succeed, it may
render Skype a relic," he said.
Cisco is appealing together with Italian fixed-line and
Internet telephone provider and Skype rival Messagenet SpA.
Judges will rule in the coming months. Their verdict can be
appealed to the European Court of Justice, the EU's highest
The last successful challenge to a Commission
merger-approval decision at the court was in 2002 in a case
involving the Sony Music and BMG record labels. In the vast
majority of cases, the court rules with the Commission.
Cisco's challenge is one of four cases against the European
Commission's rulings in merger cases, underlining the increasing
willingness by companies to challenge decisions which they
Deutsche Boerse last year filed an appeal against
the Commission's rejection of its merger with NYSE Euronext
while UPS has also gone to court against a
regulatory veto of its proposed TNT buy.
Ryanair has similarly said it will fight the
Commission's veto of its plan to buy Aer Lingus.
Cisco's case is T-79/12.