Microsoft Defeats Cisco In Court Battle Related To Skype Acquisition

Microsoft Corporation (NASDAQ:MSFT) defeated Cisco Systems, Inc (NASDAQ:CSCO) in a court battle related to its acquisition of Skype for $8.5 billion in 2011.

Cisco’s argument falls on deaf ears

Cisco Systems, Inc. (NASDAQ:CSCO) claimed that the takeover will harm competition, but the European Union’s General Court ruled otherwise.

Last year, Marthin De Beer, senior vice president of video and collaboration group at Cisco said, “Imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others. Cisco Systems, Inc. (NASDAQ:CSCO) wants to avoid this future.”

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During a hearing in May, Cisco Systems, Inc. (NASDAQ:CSCO) argued that Microsoft Corporation (NASDAQ:MSFT) created a monopoly after acquiring Skype given the fact that it is the largest internet video and voice message provider. Cisco emphasized that it was a mistake for to European Commission to approve the transaction without requiring concessions from Microsoft.

In its ruling, the General Court said, “Microsoft’s acquisition of Skype is compatible with the (European Union’s) internal market. The merger does not restrict competition either on the consumer video communications market or on the business video communications market.”

The court also explained that Cisco Systems, Inc. (NASDAQ:CSCO) has a large market share in the enterprise communications industry and there are other competitors that prevent Microsoft Corporation (NASDAQ:MSFT) from reducing competition.

Cisco Systems, Inc. (NASDAQ:CSCO) was disappointed with the decision of the court. Alison Stokes, spokesperson for the company said, “Cisco is disappointed that the court did not require the Commission to revisit inter-operability requirements for the Microsoft/Skype merger. However, we remain committed to inter-operability and will continue to work to make video calling as easy as making a phone call or sending an email.”

Microsoft acquisition held up by EU courts

On the other hand, the European Commission, which serves as antitrust regulator in the European region said, “Today’s judgment by the EU General Court confirms that the commission was correct in its assessment that the acquisition of Skype by Microsoft would not significantly impede effective competition in the European Economic Area.”

Cisco Systems, Inc. (NASDAQ:CSCO) has no plans to appeal the decision of the General Court to the EU Court of Justice.

The shares of Cisco Systems, Inc. (NASDAQ:CSCO) are trading at price of $20.84 a share, down by 1.72% as of this writing around 3:16 P.M. in New York. The stock price of Microsoft Corporation (NASDAQ:MSFT) is also down by 1.29% to $37.62 per share.