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Dreamer128 · 12-22-2004, 08:04 AM

EU Judge Upholds Penalties Against Microsoft

By Douglas Bakshian and David Lawsky
LUXEMBOURG/BRUSSELS (Reuters) - Microsoft Corp. lost a European Union court appeal on Wednesday against sanctions imposed by EU regulators that will force it to change business practices and sell a stripped-down version of Windows.

The Court of First Instance upheld the penalties imposed by the executive European Commission in March when it found the U.S. software giant had abused the virtual monopoly of its computer operating system Windows and levied a record fine.

"Microsoft has not demonstrated specifically that it might suffer serious and irreparable damage," Court of First Instance President Bo Vesterdorf said. "The application must therefore be dismissed in its entirety."

His decision means the EU antitrust regulator's remedies take effect immediately.

Microsoft said it would comply from next month with the order to sell to computer makers a version of Windows without its trademark Windows Media Player music and video software and share secret specifications with rival makers of servers.

"We will move forward immediately to comply with today's decision," Microsoft's general counsel, Brad Smith, said in a conference call with reporters. He said the company had not yet decided whether to appeal against Wednesday's order.

Vesterdorf's order was a setback to Microsoft's push for a negotiated settlement that might require the EU executive to rescind a major decision for the first time in its history.

Smith nevertheless urged the Commission to consider fresh settlement talks, arguing the judge had found some merit in Microsoft's arguments on the substance of the case.

"Is there enough here for the Commission to restart settlement negotiations?" he asked. "There's nothing here to guarantee that either side is going to win at the end of the day."

But Commission competition spokesman Jonathan Todd said the court decision had upheld the effectiveness of antitrust action and the EU executive was "not in a process of renegotiation" with the software giant.

He noted that judges find some merit in 90 percent of such cases, but that doesn't mean the appeal will prevail. Microsoft shares were slightly weaker in late morning trade in Frankfurt, down 0.40 percent at 20.07 euros.

CONSUMER VICTORY
"This is a victory for consumers," said Thomas Vinje, a Brussels lawyer who represented an industry group which dropped out of the case after a $20 million settlement with Microsoft.

EU courts have overturned a string of high-profile Commission antitrust and merger control rulings in recent years.

The decision by the second highest EU court can be appealed to the European Court of Justice, which would take another three to eight months, experts say.

Microsoft's main appeal will be heard by a panel of five judges of the lower court that will not include Vesterdorf.

Microsoft wanted the penalties, which the Commission suspended temporarily during this appeal, frozen until its court case on the substance of the EU ruling finishes years from now.

The EU executive argued that the market would have moved on and the sanctions would be obsolete. Todd said there was no longer any reason to extend the voluntary suspension.

The Commission ordered Microsoft to share data protocols -- software rules of the road -- with makers of work group servers that are used in offices to access files and run printers.

To win Wednesday's appeal for so-called interim measures, Microsoft had to show not only that it had a reasonable case but also that it urgently needed relief and that the balance of interests between it and the public weighed in its favor.

In the case of the protocols, the judge said "a number of questions of principle were raised" but "the requirement relating to urgency is not satisfied."

Microsoft did not seek to avoid the 497 million euro ($665.4 million) fine, much less than the billions of dollars it paid this year to settle antitrust cases with other companies.

The Commission ruled that Microsoft bundled its audiovisual player with Windows to damage such rivals as RealNetworks Inc.'s RealPlayer and Apple Computer Inc.'s QuickTime.

It said computer makers should be able to offer a version of Windows with audiovisual software manufactured by those rivals, rather than the Microsoft product.

© Reuters 2004. All Rights Reserved.

12-22-2004, 08:04 AM	#1
Dreamer128 Dracolisk Join Date: March 21, 2001 Location: Europe Age: 40 Posts: 6,136	*EU Judge Upholds Penalties Against Microsoft* By Douglas Bakshian and David Lawsky LUXEMBOURG/BRUSSELS (Reuters) - Microsoft Corp. lost a European Union court appeal on Wednesday against sanctions imposed by EU regulators that will force it to change business practices and sell a stripped-down version of Windows. The Court of First Instance upheld the penalties imposed by the executive European Commission in March when it found the U.S. software giant had abused the virtual monopoly of its computer operating system Windows and levied a record fine. "Microsoft has not demonstrated specifically that it might suffer serious and irreparable damage," Court of First Instance President Bo Vesterdorf said. "The application must therefore be dismissed in its entirety." His decision means the EU antitrust regulator's remedies take effect immediately. Microsoft said it would comply from next month with the order to sell to computer makers a version of Windows without its trademark Windows Media Player music and video software and share secret specifications with rival makers of servers. "We will move forward immediately to comply with today's decision," Microsoft's general counsel, Brad Smith, said in a conference call with reporters. He said the company had not yet decided whether to appeal against Wednesday's order. Vesterdorf's order was a setback to Microsoft's push for a negotiated settlement that might require the EU executive to rescind a major decision for the first time in its history. Smith nevertheless urged the Commission to consider fresh settlement talks, arguing the judge had found some merit in Microsoft's arguments on the substance of the case. "Is there enough here for the Commission to restart settlement negotiations?" he asked. "There's nothing here to guarantee that either side is going to win at the end of the day." But Commission competition spokesman Jonathan Todd said the court decision had upheld the effectiveness of antitrust action and the EU executive was "not in a process of renegotiation" with the software giant. He noted that judges find some merit in 90 percent of such cases, but that doesn't mean the appeal will prevail. Microsoft shares were slightly weaker in late morning trade in Frankfurt, down 0.40 percent at 20.07 euros. CONSUMER VICTORY "This is a victory for consumers," said Thomas Vinje, a Brussels lawyer who represented an industry group which dropped out of the case after a $20 million settlement with Microsoft. EU courts have overturned a string of high-profile Commission antitrust and merger control rulings in recent years. The decision by the second highest EU court can be appealed to the European Court of Justice, which would take another three to eight months, experts say. Microsoft's main appeal will be heard by a panel of five judges of the lower court that will not include Vesterdorf. Microsoft wanted the penalties, which the Commission suspended temporarily during this appeal, frozen until its court case on the substance of the EU ruling finishes years from now. The EU executive argued that the market would have moved on and the sanctions would be obsolete. Todd said there was no longer any reason to extend the voluntary suspension. The Commission ordered Microsoft to share data protocols -- software rules of the road -- with makers of work group servers that are used in offices to access files and run printers. To win Wednesday's appeal for so-called interim measures, Microsoft had to show not only that it had a reasonable case but also that it urgently needed relief and that the balance of interests between it and the public weighed in its favor. In the case of the protocols, the judge said "a number of questions of principle were raised" but "the requirement relating to urgency is not satisfied." Microsoft did not seek to avoid the 497 million euro ($665.4 million) fine, much less than the billions of dollars it paid this year to settle antitrust cases with other companies. The Commission ruled that Microsoft bundled its audiovisual player with Windows to damage such rivals as RealNetworks Inc.'s RealPlayer and Apple Computer Inc.'s QuickTime. It said computer makers should be able to offer a version of Windows with audiovisual software manufactured by those rivals, rather than the Microsoft product. © Reuters 2004. All Rights Reserved.