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Thursday, March 25, 2004

EU fines Microsoft $613M


Order holds 'illegal behavior is still ongoing'; appeal likely

By Paul Geitner
The Associated Press

BRUSSELS, Belgium - The European Union slapped Microsoft Corp. with a $613 million fine Wednesday for abusively wielding its Windows software monopoly and ordered sanctions that go well beyond the U.S. antitrust settlement - setting up what could be another lengthy court battle.

Microsoft called the EU's decision "unwarranted and ill-considered," and said it expected to ask a judge to suspend the order pending appeal.

The EU antitrust office said it sought to alter Microsoft's behavior because its five-year investigation found that the software giant tried to squeeze competitors out of Windows-related markets, and "the illegal behavior is still ongoing."

It gave the company 90 days to offer European computer manufacturers a version of Windows stripped of the company's digital media player, software for viewing video and listening to music that is expected to become pivotal in the industry as multimedia content becomes more pervasive.

The EU also gave Microsoft 120 days to release "complete and accurate" information to rivals in the office server market so their products can work more smoothly with desktop computers running Windows.

"Microsoft has abused its virtual monopoly power over the PC desktop in Europe," EU antitrust chief Mario Monti said.

Monti said he limited the order to Europe in deference to regulators in the United States and other countries. Microsoft, which had $32 billion in revenue last year, does about 20 percent of its business in Europe, the Middle East and Africa.

Microsoft's general counsel, Brad Smith, said he would most likely ask the presiding judge at the European Court of First Instance to stay the order pending appeal - a process that can take years.

"The European Commission has the first word, but the European courts have the final word," he said.

Microsoft chairman Bill Gates, announcing a new speech server product in San Francisco Wednesday, did not mention the EU case.

The U.S. Justice Department said the decision could hamper innovation and harm consumers.

The fine would automatically be suspended upon appeal, but antitrust experts were divided on the company's chances for winning emergency relief from the rest of the order.

"It will be up to Microsoft to show that this prohibition causes irreparable harm, which is not an easy thing to do," said Jacques Bourgeois, a former commission legal adviser now in private practice.

Others noted, however, that the commission would have to show that further delay could result in irreparable harm to competitors, such as the danger they could go out of business.

"If it's later ruled that the commission was wrong" to make Microsoft disclose information to rivals, "how do they put the genie back into the bottle?" said Stephen Kinsella, an international business expert with the Herbert Smith law firm in Brussels.

Monti noted that "dominant companies have a special responsibility to ensure that the way they do business doesn't prevent competition."




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