The European General Court in Luxembourg has rejected Cisco's bid to overturn Microsoft's $8.5bn acquisition of Skype.
Cisco claimed that Microsoft's purchase of the video and voice messaging service was anti-competitivem, but the court ruled that the networking company had failed to explain how the takeover would harm competition.
The judges said:"The merger does not restrict competition either on the consumer video communications market or on the business video communications market."
Cisco's huge share in the enterprise communications market and the existence of other competitors will prevent Microsoft from hindering competition in the sector.
In a statement, Cisco said it is disappointed that the court did not require the EU to revisit interoperability requirements for the merger
"We are hopeful that in the interest of customers and consumers, Microsoft and others in the industry will join us and continue to rally around this ideal and work together to achieve an open, interoperable video community," the networking firm said.
Cisco together with Italian fixed-line and Internet telephone provider and Skype rival Messagenet initially said they would not appeal to the EU Court of Justice, but later withdrew that statement.
The European Commission said in a statement: "Today's judgment by the EU General Court (GC) confirms that the Commission was correct in its assessment that the acquisition of Skype by Microsoft would not significantly impede effective competition in the European Economic Area (EEA).