The General Court of the European Union on Wednesday rejected a legal challenge filed by U.S. network equipment maker Cisco against Microsoft's 2011 acquisition of Skype.

"The merger does not restrict competition either on the consumer video communications market or on the business video communications market," the Luxembourg-based court said in a press release.

The case dates back to September 2011, when U.S. software giant Microsoft first notified the European Commission, the EU's executive arm, of the proposed tie-up with the Internet telephony and video provider.

Cisco, which filed its challenge along with Italian fixed-line and Internet telephone provider Messagenet, argued that the proposed merger would have a damaging effect on competition.

After the EC approved the acquisition in October 2011, Cisco and Messagenet appealed that decision to the General Court.

In Wednesday's press release, that tribunal acknowledged the merger could lead to Microsoft holding "an 80 to 90 percent share of ... video communications made on Windows-based PCs."

It noted, however, that the "consumer communications sector is a recent and fast-growing sector characterized by short innovation cycles in which large market shares may turn out to be ephemeral."

The court also rejected the argument that, as a result of the merger, Microsoft "would be able to reserve to its product on the enterprise communications market, Lync, preferential interoperability with Skype and with Skype's large user base, to the detriment of its competitors."

"The attainment of interoperability between Lync and Skype and the successful marketing of the new product resulting from this - which might, in theory, enable Microsoft to restrict competition - still depend on a series of factors," the release added. EFE