Microsoft Corporation (NASDAQ:MSFT) has been working to integrate Skype into many of its services and products, including its enterprise tools through Office 365, since Redmond bought up the Internet video-calling service last year. The full integration is nearly complete, but apparently one company is not too happy about the deal, and in fact is making a claim that the European Union botched its approval process. So in that case, the deal should not have been approved and the deal as written should be annulled, as the case goes.
The claimant in this case is Cisco Systems, Inc. (NASDAQ:CSCO), which is seeking an audience before Europe’s second highest court seeking to overturn Europe’s approval of the $8.5 billion acquisition of Skype by Microsoft Corporation (NASDAQ:MSFT), saying that the EU did not assess the deal appropriately. Microsoft Corporation (NASDAQ:MSFT) won approval of the deal “without concessions,” and Cisco is trying to annul that deal and force changes.
Cisco Systems, Inc. (NASDAQ:CSCO) is making the case alongside Italian Internet telephone provider Messagenet SpA that the EU commission that approved the deal made “manifest errors” and because of dominant market power in the European zone, Microsoft and Skype have the power to prevent vials from working with the merged firm’s products, which creates a competitive disadvantage against those competing directly with Microsoft Corporation (NASDAQ:MSFT) and/or Skype.
If Cisco Systems, Inc (NASDAQ:CSCO) loses the case, it can appeal to Europe’s highest court. The odds are stacked against it, though – the last successful challenge to a merger came in 2002, as the court has generally deferred to the commission and its due diligence in most cases. What are your thoughts about this case and about the Microsoft Corporation (NASDAQ:MSFT) acquisition of Skype? Give us your feedback in the comments section below.