Microsoft could be barred from tenders

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Microsoft could be barred from taking part in public tenders, Computer Weekly can reveal.

But Microsoft's market position may be so strong that it prevents public bodies from deploying their blacklisting powers. EU competition law may be useless in the face of technical monopolies that draw their power from the control of interoperability standards.

The question of blacklisting Microsoft was first raised in 2008 when the European Commission signed a €49m Microsoft contract with Fujitsu. MEPs asked whether the contract should be barred under competition rules. As though to punctuate their point, the contract was enacted within days of the Commission fining Microsoft €899m for failing to co-operate with previous orders to address its market abuse. The same contract is up for renewal in February.

MEPs learned that Microsoft could not be blacklisted automatically. But the law allowed public bodies to bar Microsoft contracts on a case by case basis.

The Office Of Government Commerce confirmed that public purse holders have the same powers under the 2006 Public and Utilities Contracts Regulations. This gave them discretion to exclude suppliers that have "committed an act of grave professional misconduct in the course of his business or profession".

It gave UK bodies the same option to blacklist suppliers for a breach of competition law as was established in the original EU directive under which MEPs hoped to bar the Fujitsu contract.

The UK's Office of Government Commerce said: "It would fall upon the individual contracting authority to consider on a case by case basis whether it is reasonable and proportionate to exercise its discretion to exclude."

Blacklisting

Whether it would be reasonable and proportionate to blacklist Microsoft would depend on the seriousness of its offences, their relevance to a particular tender, and whether it had absolved itself with remedial steps and by paying its fines.

This is untested territory, and not the least because no-one has yet to try and bar Microsoft.

The closest example in UK law occurred last year when the Office of Fair Trading fined 103 construction companies for price fixing. The OFT advised that public procurers should resist the temptation to bar these 103 from tenders. The was because price fixing was endemic to the building industry. It wouldn't be fair to bar only those few who were caught.

This provided no direct parallels with Microsoft. Microsoft was not one for price fixing. And one cannot say Microsoft's crimes were endemic to the market. Microsoft is the market. It's crimes were for monopoly abuse.

Simon Taylor, antitrust lawyer at Wragge & co., says purse-holders should bear in mind that "it might be proportional to blacklist someone for a limited period", but that to do it for too long "would be disproportionate". 

Microsoft

Microsoft's case is still open. It was found in abuse of its dominant market position as long ago as 2004, and upheld against Microsoft's court appeals in 2007. And Microsoft also paid €777m of EC competition fines.

But on 9 May 2008, Microsoft appealed the final €899m fine in the General Court. 30 months later, the case has still not been brought before the court. It usually takes 18-24 months before a hearing.

The fine Microsoft is appealing was imposed ultimately because it tried to extend its "near monopoly" in desktop operating systems into servers and multimedia by exerting its powers over interoperability standards.

Microsoft took steps to stem these abuses in 2007. But the question of the power it exerts over interoperability standards is still pertinent today, as open source advocates at Bristol City Council found recently to their dismay.

Bristol was just the sort of Council that might blacklist Microsoft. But it learned the hard way that Microsoft's market power cannot be denied. It's power over standards is so strong that even a public body that like Bristol, which wanted to use open source software on the desktop, simply had to give up and buy Microsoft because everyone else used Microsoft software and Microsoft standards.

Similar problems stopped MEPs in their tracks when they raised a ruckus over the Fujitsu contract.

Powerless

"Microsoft was the first company in fifty years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said the Commission on 27 February 2008, two and a half weeks before it officially awarded the €49m Microsoft contract to Fujitsu. 

Might the EC have used its discretion to bar the Fujitsu/Microsoft contract? Might it even find reason to bar the contract's renewal when it comes up in February?

It's an amusing question. Because that tender used a get-out clause to specify "Microsoft" against the rules of competition. How on earth could anyone hope to bar Microsoft from a bid that specifies the supplier must be Microsoft? EU and UK competition law looks about as useful as a Tiger Moth in fight with Godzilla.

Neither could another software supplier have a hope of winning the business. A public body wouldn't have a hope of barring a monopolist. Elected MEPs have found they have no hope of doing anything about it.

If EC competition rules can't prevent public money from being used to sustain a market-stagnating monopoly, then what will?

Microsoft was unavailable to comment. The EC has asked Computer Weekly to stop asking questions about its multi-million-Euro public contracts.

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