Done Deal: EU Approves Microsoft’s $8.5 Billion Acquisition Of Skype

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The European Commission has cleared Microsoft’s $8.5 billion proposed acquisition of Skype. As announced in May, Microsoft entered an agreement to acquire Skype for $8.5 billion in cash. With this approval, the acquisition can now take place.

The deal got U.S. regulatory approval from the FTC in June. At the time of the acquisition, Microsoft and Skype said they “hope to obtain all required regulatory clearances during the course of this calendar year”. Clearly their wish came true.

Skype will become a new business division within Microsoft, and its current chief executive Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer. Many believed that Microsoft overpaid for Skype, especially considering the fact that Facebook and Google were also sniffing around the VoIP company. And this was Microsoft’s biggest acquisition to date.

Here’s the EU’s statement on the acquisition:

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Internet voice and video communication provider Skype by Microsoft Corporation because the deal would not significantly impede effective competition in the European Economic Area (EEA) 1 or any substantial part of it.

In the area of consumer communications, the investigation found that the parties’ activities mainly overlap for video communications, where Microsoft is active through its Windows Live Messenger. However, the Commission considers that there are no competition concerns in this growing market where numerous players, including Google, are present.

For enterprise communications, the investigation confirmed that Skype has a limited market presence for these products and does not compete directly with Microsoft’s enterprise communication product Lync, which is used mostly by large enterprises.

The Commission’s investigation also focused on possible conglomerate effects, since Skype and Microsoft are active in neighbouring markets.

The transaction was notified to the Commission for regulatory clearance in the EEA on 2 September 2011.