The European Commission today launched an in-depth investigation of plans by Microsoft and Time Warner to acquire joint control of US ContentGuard Holdings.
The software giant and Time Warner plan to go 50-50 in ownership of ContentGuard, which makes technology to protect digital files from illegal copying, an increasingly important priority for movie and video makers, recording companies and software firms.
"The companies have been informed that the Commission has seen the need to start an in-depth investigation into this joint acquisition," competition spokeswoman Ms Amelia Torres told a daily
news conference.
The European Union executive, which regulates mergers and takeovers, said a preliminary review had revealed that the deal could create or boost a dominant position by Microsoft in the
market for so-called Digital Right Management.
During the in-depth probe, the Commission also plans to examine concerns that the acquisition could lead to the vertical integration of Microsoft in other markets, it said.
The opening of an in-depth merger investigation into the deal does not prejudge the Commission's final decision, which must be reached by January 6th, 2005 at the latest, the EU executive said.
Companies such as Microsoft and Time Warner are investing heavily in DRM technology as they seek ways to protect digital content.
Japan's Sony, the world's biggest consumer electronics company and also a content provider, licensed ContentGuard's DRM technology in 2002.
Microsoft, Time Warner and ContentGuard have purchased most of the stake held in ContentGuard from Xerox which had provided much of the company's basic technology. Xerox is
retaining a small equity investment in ContentGuard.