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EU throws out Cisco challenge to Microsoft/Skype deal

Cisco has been dealt a blow after a challenge to Microsoft’s $8.5 billion [£5.2 billion] takeover of Skype was knocked back by Europe’s second highest court.

As a result of the court decision Microsoft can continue to market Skype video calls to consumers and businesses without making allowances for Cisco or companies offering similar products, according to Reuters.

"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," stated the judges at the General Court based in Luxembourg.

The court added that Cisco’s huge share of the world’s enterprise communications market and other rivals in the same sector mean that Microsoft has no way of impeding competition with the Skype acquisition.

The crux of Cisco’s complaint was that sales of its expensive video conferencing hardware to companies would be affected by the fact that Skype can perform the same tasks using just a webcam. Cisco argued that Microsoft’s acquisition had created a monopoly and criticised the European Commission for failing to demand concessions from Microsoft in the wake of the deal.

Cisco’s original challenge was filed along with Italian-based Skype rival Messagenet and aimed to create a common set of technology standards in video conferencing that mean competing products are made to work together. Cisco’s main hope was to persuade the EU to impose “inter-operability” of video calls and it’s something the company still hopes to achieve.

"Cisco is disappointed that the court did not require the Commission to revisit inter-operability requirements for the Microsoft/Skype merger," Cisco spokeswoman Alison Stokes told Reuters. "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."

Over a billion users have signed up to Skype worldwide and the service has a total of 280 million active monthly users with 55 million users logged on and using the service at any one time.