Cisco challenges Microsoft buy of Skype in EU court

A page from the Skype website is seen in Singapore May 10, 2011.

BRUSSELS (Reuters) - Cisco Systems Inc, the world's leading network equipment maker, will try to convince Europe's second highest court on Wednesday that it should overturn the EU's approval of Microsoft's purchase of Skype.

If Cisco wins the challenge at the Luxembourg-based general court, the European Commission would have to annul its decision, which allowed Microsoft to buy the Internet video and voice company without having to make any concessions.

Cisco, which is appealing together with Italian fixed-line and Internet telephone provider Messagenet SpA, will argue that the Commission made several "manifest errors" in assessing the $8.5 billion Microsoft-Skype deal.

It is expected to argue that the combined company's dominant share in the communications market gave it the ability and the incentive to refuse to provide data that would allow rivals to work with the merged firm's products.

The last time a company successfully challenged a Commission merger-approval decision at the court was in 2002 in a case involving the Sony Music and BMG record labels. In the vast majority of cases, the court rules with the Commission.

A decision by the EU's general court can be appealed to the European Court of Justice, the EU's highest court.

Cisco's challenge is one of four court cases against the European Commission's rulings in merger cases.

Deutsche Boerse last year filed an appeal against the Commission's rejection of its merger with NYSE Euronext while UPS has take action against a regulatory veto of its proposed TNT buy.

Ryanair has similarly said it will fight the Commission's veto of its plan to buy Aer Lingus.

(Reporting by Foo Yun Chee; editing by Luke Baker)