Microsoft Loses Appeal Against Eu Antitrust Order

[LaoPo]

Microsoft Loses Appeal Against EU Antitrust Order

Sept. 17 (Bloomberg) -- Microsoft Corp. lost its appeal of a European Union antitrust ruling after three years of legal wrangling, forcing the world's biggest software maker to pay a record 497 million-euro ($689 million) fine and help rivals connect their products to the Windows operating system.

The European Court of First Instance in Luxembourg today backed the European Commission's 2004 decision that ordered the U.S. company to disclose proprietary data and strip music and video software from a version of Windows. The judgment can be appealed to the European Court of Justice, the EU's highest court.

Microsoft, which reached a settlement with U.S. authorities in 2002, has argued that the EU is pursuing the illegal disclosure of trade secrets and wants a veto over features on software that runs on about 95 percent of the world's personal computers. The judgment bolsters probes by Competition Commissioner Neelie Kroes of Intel Corp., Rambus Inc. and Qualcomm Inc.

``This is deeply troubling for business, the state of the law and trans-Atlantic relations,'' said Philip Marsden, a competition lawyer and senior research fellow at the British Institute of International and Comparative Law. ``The ruling shows a total diversion between the U.S. and Europe.''

Microsoft shares fell 2.5 percent to $28.32 as of 12:11 p.m. in Frankfurt trading.

`Credibility'

Microsoft General Counsel Brad Smith said the company will study the decision carefully. ``If there are additional steps that we need to take in order to comply with it we will take them,'' Smith told reporters outside the courtroom.

``The commission did not err in assessing the gravity and duration of the infringement and did not err in setting the amount of the fine,'' the tribunal said in its 248-page judgment. The court upheld part of the appeal on whether Microsoft must pay for monitoring its compliance.

``The court ruling shows that the commission was right to take its decision,'' the EU's Kroes said in a statement. ``Microsoft must now comply fully with its legal obligations to desist from engaging in anti-competitive conduct. The commission will do its utmost to ensure that Microsoft complies swiftly.''

The EU case against Microsoft started with a 1998 complaint by Sun Microsystems Inc. The commission, the EU's antitrust authority in Brussels, began investigating whether Redmond, Washington-based Microsoft used its dominance in desktop PCs to quash competition in related markets, such as servers.

Disclosure

Microsoft had set aside the money for the fine and began selling a version of Windows without a media player in Europe. The part of the decision focused on how Windows communicates on a network has been more controversial.

That disclosure aspect of the case led to an unprecedented additional fine of 280.5 million euros in July 2006 when Kroes ruled the company failed to comply. She threatened to levy millions of euros more.

Microsoft's refusal to obey the decision has forced a reassessment of remedies for future cases because ``we have never had an experience like this one,'' Kroes said in April. A breakup, or ``structural remedy,'' may be appropriate when other measures fail, she said.

Microsoft has argued in court documents that the EU decision wasn't justified because rivals don't need access to its so-called network protocols to connect their servers with its own. The company also said regulators shouldn't force it to make product design changes to appease rivals.

`Reduction in Sales'

The March 2004 order would allow competitors to ``better mimic the functionality of Microsoft's own products which could result in a reduction in sales,'' Microsoft said in an Aug. 3 filing to the U.S. Securities and Exchange Commission.

The court rejected Microsoft's argument that it could withhold the data because it was protected by patents, copyrights and trade secrets. The judges said that the company failed to show that its incentive to innovate would be harmed by disclosing the information.

``It's a big loss for Microsoft,'' said Nicholas Economides, a law professor at New York University. ``It will make Microsoft sell some products with different functionality in the U.S. and Europe.''

The company faces another possible probe in Europe. In February 2006, the European Committee for Interoperability Systems, a group that includes International Business Machines Corp. and Oracle Corp., claimed that Microsoft uses dominance in word processing and spreadsheets to thwart rivals.

http://www.bloomberg.com/apps/news?pid=206...&refer=news

LaoPo

[LaoPo]

European court rejects Microsoft's appeal

LONDON (MarketWatch) -- The European Court of First Instance on Monday rejected an appeal by Microsoft to annul the antitrust decision by the European Commission, upholding a fine of 497 million euros ($689 million).

The court agreed with the European Commission that Microsoft abused its dominant position by failing to make its products compatible with those of rivals, and by bundling software products together with its core operating system software.

The court rejected "Microsoft's claims that the degree of interoperability required by the commission is intended in reality to enable competing work group server operating systems to function in every respect like a Windows system and, accordingly, to enable Microsoft's competitors to clone or reproduce its products."

Arguments made by the regulator about Microsoft's bundling of Windows Media Player with its operating system were "well founded," the court added. See text of ruling.

One minor victory for Microsoft was that the European Court said a monitoring trustee was not legal.

Neelie Kores, the European Commission's competition commissioner, said the case sets a precedent on the obligations of "dominant companies" to allow competition, notably in high-tech industries.

Ted Henneberry, the co-chair of the European practice group at Heller Ehrman, said he found it puzzling that the court would limit the ability for Microsoft to integrate features into its products.

"I would just contrast (the ruling) with the European Commission's stated philosophy of trying to encourage R&D. I'm afraid Europe is coming down on the side of protecting competitors and not consumers," he said.

Henneberry's firm previously represented Microsoft in private litigation, but not in any of the government cases.

Other large U.S. companies now being closely scrutinized by antitrust regulators in Europe include Intel Corp. and Rambus Inc. Rambus Inc complained to the European Commission about its anticompetitive behavior.

Microsoft, in turn, has complained that the commission has been critical, without offering specific remedies for it to follow. In a mandated effort to increase the compatibility of its products, Microsoft has begun compiling protocols, or blueprints for the way its products interact, for its rivals' perusal.

Microsoft has said that regardless of the Court of First Instance's opinion on its appeal, it will continue producing protocols.

In addition to products like Microsoft's Vista, which may draw future attention, other products likely to be scrutinized by European antitrust regulators in the future include computer chips.

In July, the European Commission charged Intel with behavior that was unfairly cutting rival Advanced Micro Device Inc. out of certain markets by using rebates.

In addition, chipmaker Rambus has also been accused by the European Commission of anticompetitive behavior, by not properly disclosing patents that it later sought related royalty payments for from its rivals.

http://www.marketwatch.com/news/story/euro...5EB7A2249704%7D

LaoPo

[Crushdepth]

Have we learned yet ? No? See you in court next year...

[Phil Conners]

Som nam nah Microslush, learn to play by the rules ...

[cdnvic]

I suppose the EU will now go after car makers who bundle radios in with their vehicles?

How about detatching Quicktime from osX?

This is more about knocking down a tall poppy than anything.

[RKASA]

Maybe no PC maker is going to be able to put any OS on a PC until after its sold, and then every piece of software can be listed and priced seperate. That way there is no bundling. It'll make shopping fun for everyone.

[chuchok]

I suppose the EU will now go after car makers who bundle radios in with their vehicles?

How about detatching Quicktime from osX?

This is more about knocking down a tall poppy than anything.

If it were just that,then I would say "good job".