EU rejects Cisco challenge to Microsoft's Skype acquisition

The merger does not restrict competition either on the consumer video communications market or on the business video communications market, say judges

The European General Court, the second most powerful court within the EU, has upheld Microsoft's $8.5bn (£5.3bn) acquisition of Skype, despite an appear against it by Cisco Systems.

The world's largest network equipment producer had claimed that Microsoft's purchase of the Skype video and voice messaging service was anti-competitive. Cisco said that Microsoft should be forced to make concessions before the deal went through in order to prevent dominance of the entire market.

However, at a hearing in Luxembourg, the General Court stated that the deal wouldn't harm competition in the internet voice and video messaging space.

"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," said the judges.

Microsoft finalised the deal for Skype in October 2011, but Cisco announced plans to appeal against the European Commission's approval of the deal in February last year.

"For the sake of customers, the industry recognises the need for ubiquitous unified communications interoperability, particularly between Microsoft/Skype and Cisco products, as well as products from other unified communications innovators," Marthin De Beer, senior vice president and general manager, video and collaboration, argued in a blog at the time.

"Microsoft's plans to integrate Skype exclusively with its Lync Enterprise Communications Platform could lock-in businesses who want to reach Skype's 700 million account holders to a Microsoft-only platform."

Cisco still has the opportunity to appeal against the decision to the European Court of Justice should it wish to do so.