British software reseller files £270 million antitrust court action against Microsoft

ValueLicensing alleges that Microsoft pressurises customers not to sell unused Windows and Office licences, to the detriment of the secondhand market

Derby-based reseller ValueLicensing has filed a £270 million antitrust lawsuit against Microsoft in the UK High Court, accusing the US firm of trying to kill competition in the secondhand software market.

Founded in 2009, ValueLicensing is a software licence reseller that specialises in procuring pre-owned Microsoft software licences from businesses and selling them across the UK and Europe. The firm buys licences from businesses that no longer require them, either due to upgrading their IT to cloud or after becoming insolvent. Its client base is made up primarily of public sector bodies, including local councils and NHS trusts.

ValueLicensing claims that its tailored solution can help businesses make significant savings of up to 70 per cent. It points to one NHS Trust that supposedly saved nearly £1 million by using 4,800 Office 2019 Pro Plus licences, rather than purchasing the latest version of the office tools suite.

"We're experts at buying and selling legal and fully compliant pre-owned Microsoft volume licences across their entire product range. Since 2009, we're proud to have been empowering the public and private sector across Europe with savings of up to 70 per cent on their software licences," the company says.

The company claims it has lost hundreds of millions of pounds in revenue since 2016 because Microsoft pressurises companies in the UK and EEA not to sell licences they no longer require, imposing anticompetitive contractual clauses on customers and restricting the resale of perpetual licences as a condition for a discount on its cloud-based software, such as Office 365.

It alleges that Microsoft has been abusing its market power and pseudo-monopoly on office software to keep prices of its software services like Office 365 artificially high.

The net result has been higher prices and less choice for customers, who have been steered into cloud-based Office365 and Azure subscriptions, it says. The claim covers perpetual licences for desktop software (Windows, Office and related products), but other products may also be subject to the same practices, according to the reseller.

A spokesperson for the company told Computing: "ValueLicensing takes the view that Microsoft's behaviour breaches competition law. Microsoft has abused its dominant position, contrary to the UK Competition Act 1998. The contractual terms Microsoft has required its customers to accept in exchange for discounts amount to anti-competitive agreements."

Jonathan Horley, the founder and CEO of managing director, said that while Microsoft is benefitting from the unlawful behaviour, it is depriving businesses of the option to purchase cheaper IT tools. The value of software licence is declining, according to Horley, as the resale market shrinks.

"Microsoft's illegal behaviour has impacted almost every organisation that provides desktop software for its workforce in the UK and the EEA," Horely said in a statement.

"ValueLicensing is not the only victim. In purchasing software, public and private-sector organisations presently have little option but to move to subscriptions offered by Microsoft, because there are so few preowned perpetual licences available now, as a result of Microsoft's campaign to almost entirely drain the market.

"Microsoft is an unavoidable partner. Its software is integral to virtually all organisations. Its position of economic strength enables it to prevent effective competition being maintained for preowned perpetual licences because it has the power to behave to an appreciable extent independently of its competitors and taxpayer-funded public sector organisations and private sector businesses of all sizes."

If such practices are allowed to continue, customers will soon have no choice but to move to Microsoft's subscription model, Horley added.

ValueLicensing is asking the UK High Court "to award damages for the loss it has suffered as a result of Microsoft's conduct".

The company says that the lost UK and EEA sales of desktop products (as a result of Microsoft practices) since 2016 would have resulted in an estimated gross profit of about £270 million.

"Losses are continuing and ValueLicensing reserves the right to amend the scope of the claim," it said.

Microsoft has declined to comment on the lawsuit.