That ruling could eventually set an important precedent for the software industry, if it survives a Microsoft appeal. But it has instantly cemented Monti's legacy as an aggressive antitrust enforcer, legal experts said, one who is able to learn from past mistakes and to persist in making risky calls, despite some sharp rebukes.
"He's a very tough enforcer, and he certainly made the EU directorate a force to be contended with," said Stan Gorinson, a partner with Kilpatrick Stockton in Washington, D.C., and a former high-level regulator with the U.S. Department of Justice.
People who have represented clients in proceedings before the European Commission describe Monti as quiet and professorial, in stark contrast to boisterous Microsoft CEO Steven Ballmer. The two recently sat across from each other inaimed at brokering a last-minute settlement in the case. But these same people add that Monti has deep reserves of willpower that have carried him through the controversies of his administration without his losing his convictions.
"Monti is not the type to bow down to any verbal aggression," one European antitrust attorney said. "He may have an academic exterior, but there's steel inside."
Appointed to head the commission's competition division in 1999, Monti has presided over a tumultuous period in European antitrust law. On his watch, an appeals court for the first time in history overturned the recommendations of the commission in a merger review--not once, but three times. Although two of those cases were decided by his predecessor, Monti bore the brunt of the ensuing criticism of the division. In addition, a fourth appeal pending in the GE-Honeywell case could add to his tally of reversals.
The 61-year-old former economics professor was born in Varese, a town in northern Italy. A banker's son, he studied at Bocconi University and did graduate work at Yale before returning to Bocconi in 1965 to teach economics.
Monti took over as EU competition commissioner from Karel Van Miert and quickly established himself as an aggressive antitrust enforcer. While Van Miert blocked just 10 mergers during his tenure--and famously delayed Boeing's merger with McDonnell-Douglas--Monti moved against three deals in his first year.
Of those actions, his decision to block the proposed combination of British travel companies Airtours and First Choice Holidays was overturned in 2002 by the European Court of First Instance in Luxembourg. That ruling has opened the European Commission to an unprecedented claim for damages.
Other deals Monti blocked include Sprint's proposed merger with MCI--a combination that was also disallowed by U.S. regulators. Applying new rules of market concentration, he also prevented Time Warner from acquiring U.K.-based music label EMI.
Despite some setbacks, legal experts said that Monti has brought a greater degree of deliberation to the European Commission's antitrust proceedings than did many of his predecessors.
He made economic analysis a top priority in examining the competitive effects of mergers, creating the position of chief economist within the competition division and hand-selecting its first appointee.
He also took on politically unpopular causes, revoking numerous aid programs in which governments provide subsidies to local businesses and industries. In addition, he significantly stepped up anticartel actions, emulating U.S. antitrust enforcers by offering leniency to accused cartel members that assist in investigations, and expanding the division's investigative powers.
"Monti has absorbed some body blows, but he immediately set about not wringing his hands, but examining how to fix it," said one U.S. attorney who has represented clients in proceedings before him. "He's cautious, thorough, thoughtful and deliberate."
If Monti approaches the facts and technical issues in a case with caution, he has not been shy in applying the law decisively based on his analyses--a trait that struck home clearly in Wednesday's decision as well as in the GE-Honeywell case. In insisting that the Microsoft decision set a strong precedent for the company's future behavior, he has clearly taken a risky, if calculated, course.
"It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market," Monti wrote in alast week, signaling that settlement talks with Microsoft had failed.
If Monti has brought stricter review and more aggressive enforcement of antitrust matters, many believe the ultimate legacy of his administration may be greater judicial review of European Commission decisions. That issue is on the front burner, as Microsoft prepares its appeal of Wednesday's findings.
Although the Microsoft ruling is risky, observers said Monti has worked hard to craft a decision that will not only survive on appeal, but also that will avoid a stay that could drag the case out for years without a remedy. Recent events have made Monti acutely cognizant of the appeals court, according to one attorney who asked not to be named, and that, in the end, could be Microsoft's greatest reason to fear the commission and his findings.
"He's taken a lot of heat from Luxembourg court...but he's brought that learning to bear," this person said. "He's been bending over backwards to ensure they have no reason to find fault with this decision."
The case has been insulated from charges of regional favoritism since it will mostly affect U.S.-based competitors of Microsoft, such as Sun Microsystems and RealNetworks. But Monti did not want to risk a repeat of the aftermath of the GE-Honeywell merger veto in 2001, issued after U.S. regulators had approved the deal. That decision created a diplomatic furor, spurring U.S. officials, including President George W. Bush, to raise concerns about the commission's handling of the merger.
Since then, the European Commission has worked at bolstering its relationship with Washington. People familiar with the agencies said Monti's relationship with U.S. regulators has actually deteriorated during the Bush administration, which has taken a less aggressive antitrust stance than the Clinton regime. But there have been signs of strengthening ties recently. Last week, the Department of Justice reasserted that it believes its own settlement with Microsoft is adequate. But it noted in a statement that it has a "strong working relationship" with the European Commission.
"It took a lot of courage for him to go after Microsoft," said Dan Rubinfeld, an economics professor at the University of California at Berkeley who worked on the U.S. Justice Department's antitrust case against Microsoft. "There has been a lot of talk of politics in this and other cases, but I believe he has been driven entirely by the desire to do the right thing."