EU Committee Backs Order Against Microsoft In Antitrust Case - InformationWeek
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3/15/2004
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EU Committee Backs Order Against Microsoft In Antitrust Case

The endorsement bolsters the European Commission's hand in dealing with Microsoft, which is still seeking a settlement.

BRUSSELS, Belgium (AP) -- The European Union's antitrust chief won critical backing Monday for a potentially landmark ruling against Microsoft Corp. that sources say finds the U.S. software giant abused its Windows monopoly.

It also demands changes in the way the company operates, the sources said.

A closed-door session with representatives of the 15 EU governments--which had been expected to run all day due to the case's complexity--ended shortly after noon instead, European Commission spokeswoman Amelia Torres said.

"The member states have unanimously backed the commission's draft decision," she said, without elaborating. Sources familiar with the case, speaking on condition of anonymity, said there were "no problems" raised, and the draft is tentatively set to be adopted next week.

The endorsement bolsters the commission's hand in dealing with Microsoft, which is still seeking a last-minute settlement even as it pledges to carry on the fight in court.

Microsoft hopes to avert a far-reaching order that would result in a fine of up to $3 billion and also force the company to change the way it sells its flagship Windows to computer-makers in Europe.

Given the size of the EU market, such an order could have global implications for Microsoft, which argues its practice of continually adding new features to Windows benefits consumers. Rivals complain it amounts to unfair competition.

A negative decision would be the biggest setback for Microsoft since a U.S. judge found it guilty of antitrust violations involving Internet browsers in 2000. Microsoft reached a settlement with the Bush administration a year later, allowing it to keep its Internet Explorer in Windows with some conditions.

Sources say the EU's draft ruling similarly finds Microsoft abused its monopoly in computer operating software to gain share in markets for digital media players and low-end servers. But the remedies sought go beyond the U.S. deal.

The EU wants Microsoft to offer computer makers a version of Windows without its Media Player to give rivals such as RealNetworks Inc. a better shot at getting onto consumer desktops. It also would demand Microsoft release more basic Windows code to improve "interoperability" with competing networking software made by Sun Microsystems and others.

The backing from national governments should give EU Competition Commissioner Mario Monti political cover to stand firm in the face of heavy lobbying from Microsoft and any complaints from Washington.

"I'm sure they want a visible record of endorsement as they go forward," said Chris Bright, an antitrust lawyer with Sherman & Sterling in London.

Memories are still fresh in Brussels of the criticism from across the Atlantic after Monti blocked General Electric Corp. from buying Honeywell Inc. in 2001.

The national antitrust regulators reconvene March 22 to consider the size of the fine against Microsoft. The commission is expected to adopt the decision as early as March 24 and set out a timetable--usually a matter of months--for compliance.

The European Court of Justice could suspend the decision pending Microsoft's promised appeal, but such an injunction is not automatic.

Given the rapidly changing nature of the industry, the commission is expected to argue its order would be meaningless by the time the appeal is decided, a process that can drag on for years.

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