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EU commission approves Microsoft-Skype merger

Antitrust regulators in the European Union have granted its approval today of Microsoft's US$8.5 billion acquisition of Skype, the VoIP giant.

"In the area of consumer communications, the investigation found that the parties' activities mainly overlap for video communications, where Microsoft is active through its Windows Live Messenger," the European Commission, the EU's antitrust agency, said in its ruling.

The commission said it didn’t have any significant antitrust concerns over the merger first announced in May. "The Commission believes that there are no competition concerns in this emerging market where numerous players, including Google, are present," the commission said in a press statement, referring to competition concerns for consumers, who make up the bulk of Skype's customers.

The commission also dismissed concerns that the acquisition would smother competition in the enterprise communication market. According to the EU, Skype is currently of little concern in the enterprise communications (EC) market. The commission said it does not consider the deal to pose any threat to current enterprise communications vendors such as Cisco.

"Our investigation confirmed that Skype has a limited market presence for these products and doesn’t compete directly with Microsoft's enterprise communication product Lync, which is used mostly by large enterprises," the commission added.

Microsoft officials applauded the EU antitrust watchdog's decision. "This is an important milestone, as we have now received clearance from both the U.S. and the European Union," said Brad Smith, Microsoft's lead attorney, in a Friday statement. "We look forward to completing soon the final steps needed to close the merger."

Last June, U.S. regulators at the Department of Justice gave Microsoft its approval after also deciding that there was sufficient competition from other major players, including Google.

The Commission's decision also stymies an earlier complaint submitted by Messagenet, an Italian rival to Skype, which last month asked EU regulators to block the deal unless Microsoft agreed not to bundle Skype with its Office products.

Messagenet's complaint resurrected previous arguments that the EU had used against Microsoft for years in a case over the bundling of a media player with Windows. That action ended in 2007 when Microsoft lost on appeal; the company paid a US$1.4 billion fine the following year. Messagenet didn’t comment on the EU Commission's decision today.

The EU ruling will enable the proposed acquisition to clear a critical hurdle on its long path to becoming finalized.