PRESS RELEASE Brussels, 4 December 2013
Mergers: Commission clears acquisition of Nokia's mobile device business by Microsoft The European Commission has cleared under the EU Merger Regulation the proposed acquisition of most of Nokia Corporation's devices & services business (the "D&S business") by Microsoft Corporation. The D&S business mainly produces and sells smartphones and feature phones. 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. 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 Commission also investigated a number the vertical relationships between the merged entity's activities in the downstream market for smart mobile devices and Microsoft's upstream activities in mobile operating systems (OS), mobile applications (apps) and enterprise mail server software and related communication protocols. The Commission concluded that: 1) Microsoft is unlikely to restrict the supply of its Windows OSs for smart mobile devices to third party device manufacturers after the transaction. Indeed, Microsoft's share in the mobile OS market is limited. Moreover, to better compete with the leading Android and Apple OS platforms, Microsoft likely needs to continue relying on third party device suppliers to broaden consumer adoption and attract mobile app developers. 2) 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. 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.
3) Microsoft would not have the ability to restrict the interoperability of competing smart mobile devices with Exchange Server, Microsoft's enterprise mail server software, 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. Moreover, given the limited portion of the market which could be foreclosed and the merged entity's very small market position in the smart mobile device market, such a conduct would in any event not produce anti-competitive effects. 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 Commission cannot take account of such concerns in the assessment of the current transaction. Indeed, Nokia is the seller whereas the Commission's investigation relates to the merged entity. However, the Commission will remain vigil