EU court rejects Cisco challenge; upholds Microsoft, Skype deal

Luxembourg: Europe's second highest court upheld a decision on Wednesday by European Union regulators clearing Microsoft's $8.5 billion takeover of Skype in 2011, rejecting a challenge by the world's top network equipment maker Cisco Systems Inc .

At a hearing in May, Cisco argued that Microsoft's acquisition of the Internet video and voice messaging company created a monopoly and that the European Commission was wrong to approve the deal without demanding concessions from Microsoft.

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The case comes as an increasing number of users switches to cheaper Internet-based voice and video services, grabbing market share from telecoms operators.

The Luxembourg-based General Court said Cisco failed to show that the takeover would harm competition.

"Microsoft's acquisition of Skype is compatible with the internal market. The merger does not restrict competition either on the consumer video communications market or on the business video communications market," the judges said.

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Cisco, which filed its challenge together with Italian fixed-line and Internet telephone provider and Skype rival Messagenet SpA, can appeal to the EU Court of Justice.

The case is T-79/12 Cisco Systems and Messagenet SpA v Commission.

Reuters