[NYTr] Microsoft loses landmark EU antitrust case

[All the News That Doesn't Fit]

AFP - Sep 17, 2007
http://www.afp.com/english/news/stories/070917095211.t4fxhi6p.html

Microsoft loses landmark EU antitrust case

LUXEMBOURG (AFP) - A top European court on Monday backed the European
Commission in its anti-trust battle with Microsoft, ordering the
world's biggest software maker to pay a record 497 million euro (690
million dollar) fine.

Against most expectations for a split judgement, judges at the European
Court of First Instance, the EU's second highest court, backed most of
the European Commission's 2004 ruling against the US giant.

Microsoft general counsel Brad Smith said the company would "study" the
ruling before deciding to appeal, but would take "additional steps" to
comply with decision.

"We'll study this decision carefully and if there are additional steps
that we need to take to comply with it, we will take them," a visibly
shaken Smith told reporters the decision was delivered.

The ruling, which Microsoft has two months and 10 days to appeal
against, left Microsoft's opponents and the European Commission
jubilant, describing it as a victory for consumers and innovation.

"This judgement confirms the objectivity and the credibility of the
commission's competition policy," commission President Jose Manuel
Barroso said. "This policy protects the European consumer interest and
ensures fair competition between businesses."

The tribunal confirmed the commission's 2004 antitrust finding that
Microsoft had used its 95-percent share in operating systems in
personal computers to crush rivals in other linked markets.

The verdict dealt a painful blow to Microsoft's business strategy,
which has seen it become one of the biggest and most profitable
enterprises in the world.

Billed as one of the biggest EU court judgements ever, the verdict
holds huge stakes for Microsoft and for Europe's capacity to regulate
corporate giants from all over the world.

The court upheld the record 497-million euro fine that Europe's chief
regulator also slapped on Microsoft, although this would appear a drop
in the ocean for the powerful software giant.

While Microsoft emerged in 2002 from a similar case in the United
States relatively unscathed, EU regulators have taken a much harder
line towards the company than their US counterparts.

The EU case goes back to March 2004 when the EU Commission ruled after
a five-year probe that Microsoft had abused its share of the market for
operating systems running personal computers thanks to its ubiquitous
Windows programme.

In particular, it accused Microsoft of using its stranglehold on PC
operating systems to elbow rivals out of the more competitive markets
for media players that play music and videos and operating systems
running back-office servers.

The Commission ordered Microsoft to sell a version of Windows PC
without a media player already bundled in and to share technical
information with rivals needed to make product that could function with
Windows.

Microsoft has fought back at every chance, arguing that customers
prefer Windows to include a media player and that the Commission wants
it to turn over valuable trade secrets often protected by patents and
copyright to competitors.

While the court considered the case, the battle between Microsoft and
the Commission has rumbled on with EU regulators consistently turning
up the pressure on the company to comply with its demands.

Brussels fined Microsoft a further 280 million euros in July 2006 after
finding that it was not respecting its original ruling, and the company
faces further penalties that could bring the total well past one
billion euros.

However, the Commission has been waiting to see whether the court would
back its original ruling before pushing ahead with further action
against Microsoft.