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Microsoft-Yahoo Deal Undergoes Informal EU Review

Posted on: Thursday, 17 September 2009, 06:40 CDT

A $44.6 billion offer for Yahoo has put Microsoft before the European Union (EU) competition regulators, as the company tries to convince them that the deal would bring healthy competition to the market.

"There are ongoing informal discussions between the European Commission and Microsoft and Yahoo on their search engine partnership," said a source familiar with the situation on Tuesday, without providing more details.

Even though antitrust experts say the EU could still move forward with a formal examination, the fact that they started with an informal probe is probably a good sign for the potential deal.

Microsoft acknowledged that the informal dialogue was indeed taking place.

"As we said when the agreement was announced, we anticipated that this deal will be closely reviewed in the United States and EU, and discussions in both geographies continue," Microsoft spokesman Jack Evans told Reuters.

"We remain hopeful the deal will close in early 2010."

Microsoft and Yahoo came to an agreement on a 10-year Web search deal in July, wanting the role of challenger against market leader Google Inc, which dominated the worldwide search market in July with a 67.5 percent share, according to comScore.

If Yahoo and Microsoft merge their search engines, they will together hold about 30 percent of the U.S. search market, while providing a far more attractive spot for marketers to drop their money for advertisement.

U.S. antitrust authorities asked for the companies to provide more documents last week, which means the review could take months. Neither of the companies expect the antitrust review to be finished before early 2010.

Afternoon trading on Nasdaq showed that Yahoo’s shares were up 3.3 percent to $16.95, while Microsoft's shares were off 6 cents, or less than 1 percent, to $25.14.

It is still not certain whether the companies will have to obtain approval from the European Commission or from national regulators in EU countries.

"For high-profile cases which could raise complex issues, companies might want to get some reassurance from the Commission on whether there could be any competition concerns," said an antitrust lawyer in Brussels who requested anonymity.

Despite the somewhat long and tedious review process, Microsoft believes they will be able to successfully convince regulators that a Google rival is just what the market needs.

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On the Net:

• Yahoo
• Microsoft

Source: RedOrbit Staff & Wire Reports

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