The target, ContentGuard, is a leading provider of DRM technology, which controls how copyrighted digital content, such as DVDs or software, can be viewed, used, or abused.
Microsoft and Time Warner announced in April 2004 that, together with ContentGuard, they had purchased most of the stake held in that company by its original owner, Xerox.
The Commission began an investigation into the purchase in August, after an initial review gave rise to fears that the purchase of a leading DRM technology provider such as ContentGuard might put Microsoft into a dominant position in that sector.
EU competition regulators were due to rule on the matter by 6th January, but halted the review when Paris-based Thomson announced in December that it had agreed to buy a 33% voting stake in ContentGuard, potentially reducing the antitrust impact on the market.
Thomson's acquisition took place yesterday, prompting the Commission to announce that the transaction is no longer subject to EU merger rules and that the investigation has accordingly been dropped.
"Following the Commission's objections, the shareholding structure and governing rules of ContentGuard have been significantly modified," said the Commission. "Hence, Microsoft, Time Warner and Thomson hold each a one-third stake and none of them has control over ContentGuard. Consequently, Microsoft will no longer be in a position to shape ContentGuard's licensing policy to the detriment of Microsoft's competitors."
Paul Cappuccio, Time Warner Executive Vice President and General Counsel, said: "We appreciate the hard work the Commission has done on this case and we are pleased it could be resolved in a way that was mutually agreeable."
The Commission has warned that it will closely monitor developments within the sector and will take antitrust action if necessary.
