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Taking on an uphill battle, Cisco Systems Inc. is appealing the European Commission's unconditional clearance of Microsoft Corp.'s $8.5 billion acquisition of Skype Technologies SA.The appeal, announced late Wednesday, Feb. 15, in a company blog, comes more than four months after European Union regulators gave their blessing to the largest-ever acquisition in Microsoft's 37-year history.
During a routine one-month probe, regulators found that the companies' activities mainly overlap in video communication, where Microsoft is active through its Windows Live Messenger. They concluded that there are no competition concerns in the growing market in which numerous players, including Google Inc., are active.
Cisco, which had formally expressed its concerns to the Commission during its investigation, is now asking the Luxembourg-based General Court to overturn the EC's decision. Cisco said it has been joined in the appeal by Messagenet SpA, an Italian voice-over-Internet-protocol service provider.
"Cisco does not oppose the merger, but believes the European Commission should have placed conditions that would ensure standards-based interoperability, to avoid any one company from being able to seek to control the future of video communications," Marthin De Beer, a senior vice president at San Jose, Calif.-based Cisco, said in Wednesday's blog.
Specifically, Cisco argues that Redmond, Wash.-based Microsoft's plans to integrate Skype exclusively with its Lync messaging and teleconferencing software for corporate customers could "lock in" businesses that want to reach Skype's 700 million account holders to a Microsoft-only platform.
The Commission has said that it will defend its decision in court, with antitrust lawyers cautioning that a successful appeal is a long shot at best. "The truth is that such appeals are not only rare but almost never successful," one Brussels-based law partner said.
Possibly the only court ruling overriding an EC merger clearance was a 2008 decision by the Court of First Instance, as the lower court was known at the time. Acting on a complaint brought by Brussels-based independent record label organization Impala, the court took issue with the Commission's clearance of Sony Corp.'s music joint venture with Bertelsmann AG.
But that ruling was later overturned by the EU's highest court while the EC was in the midst of its second review of the deal -- which reached the same conclusion as the first time around to wave through the venture.
Microsoft is confident that the EC clearance will stand. "The European Commission conducted a thorough investigation of the acquisition, in which Cisco actively participated, and approved the deal in a 36-page decision without any conditions," said Jesse Verstraete, a Brussels-based spokesman for Microsoft.
He added: "We're confident that the Commission's decision will stand up on appeal."

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