He Holds Microsoft's Fate In His Hands

He's a giant of European jurisprudence, but Bo Vesterdorf is hardly a household name. The 59-year-old Danish judge helped found Europe's second-highest judicial body, known as the Court of First Instance, in 1989. For the past six years, he has been president of the tribunal, which hears initial appeals of European Commission rulings. But the only Americans who know anything about Vesterdorf are globe-trotting international lawyers.

Now he is going to be in the limelight as never before. By June, software giant Microsoft Corp. (MSFT ) will appeal the European Commission's Mar. 24 ruling that it has behaved as an abusive monopolist. As the chief judge of the Court of First Instance, Vesterdorf will wield enormous influence. He and he alone will decide whether to grant Microsoft a stay of some or all of the EC's proposed remedies -- a ruling that could potentially take a lot of pressure off the company. He will determine if Microsoft should receive an expedited appeal. And he will choose which of the court's five chambers, each made up of three to five judges, will handle the controversial case -- a determination that could tilt the outcome. It is no exaggeration to say that Microsoft's legal fate now lies largely in his hands.

Neither Vesterdorf nor the other judges on the panel he leads are fainthearted. During a five-month period in 2002, the Court of First Instance dealt three stinging reversals to Mario Monti -- in each case approving mergers the European competition czar had rejected. The Luxembourg-based judges ruled that Monti's staff had made its decisions based on sloppy economic analysis and had even failed to adequately respect the rights of defendants. "This is no longer a court that defers to the European Commission. In the last two years, the commission has lost a lot of cases," says Microsoft general counsel Bradford L. Smith.

But if these omens seem like a beacon of hope for Gates & Co., they had best check their optimism. Those humiliating reversals sent Monti into a frenzy of housecleaning -- precisely to preclude a similar setback in the Microsoft case. The matters overturned by the court were filed during the high of the late-1990s economic boom, when a wave of mergers tripled the EC's merger-review caseload and taxed its staff. Monti has since beefed up his staff and instigated tough new procedures to vet cases more carefully. He also added a chief economist to deepen his agency's market analysis and set up "devil's advocate" panels to test the logic of each decision.

Plus, the high-profile reversals concerned mergers rather than the predatory conduct of monopolists. So it is unclear whether they presage trouble for the EC's decision. Vesterdorf's court has upheld several high-profile EC competition rulings this year. And the judge has hinted in public comments that he looks askance at granting companies emergency stays of the Commission's competition rulings.

There's one wrinkle ahead: Vesterdorf's term ends in August, and he must be renominated by the Danish government and then be reelected president by a court that will grow from 15 to 25 members on May 1, when the European Union undergoes a major expansion. Still, Vesterdorf is widely expected to return -- and he's likely to play just as big a role in Microsoft's near future as Mario Monti has in its recent past.

By Andy Reinhardt in Paris

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