Europeans Checking MathWorks’ Competition Calculations In Software Market

The European Commission (the “EC”) has announced an investigation into whether The MathWorks, a U.S. software company, abused its dominant position by preventing competitor interoperability with its products.

The EC is investigating whether MathWorks – a leading developer of mathematical computing software for engineers and scientists – violated Article 102 of the Treaty on the Functioning of the European Union.  This investigation represents one of the most high-profile investigations by the EC concerning software interoperability since its landmark enforcement action in the Microsoft case. 

The EC investigation was sparked by a complaint that alleges that MathWorks refused to provide a competitor with software licenses and interoperability information necessary to “reverse engineer” interoperability with MathWorks’s products.  Such a refusal could have restrained competition in the market for the design and simulation of commercial control systems.  European Directive 2009/24/EC authorizes reverse-engineering for interoperability purposes. 

In its announcement, the EC cited its decision in the 2004 case against Microsoft, which required the software company to disclose application programming interfaces for the Windows operating system.  In 2007, the Court of First Instance (which is now known as the General Court) confirmed the EC’s decision.  The EC again investigated and fined Microsoft in 2008 for non-compliance with the 2004 decision.

The EC’s investigation of MathWorks signals that the competition authority intends to use its Microsoft decisions as precedent for further enforcement actions and that the EC does not view the Microsoft case as a unique set of circumstances confined to a single company.

MathWorks and Microsoft do share some market similarities.  In particular, just as Microsoft dominated the desktop operating system market, MathWorks is a leader in mathematical computing and simulation software with products like MATLAB and Simulink, which are widely used by engineers and scientists around the world in both industry and academia.    

This isn’t the first time that MathWorks has attracted the attention of competition authorities.  The U.S. Department of Justice filed a civil lawsuit in 2002 against MathWorks for alleged market allocation with a competitor for designing dynamic control systems.  MathWorks settled with the Justice Department that same year.