(AFP) – Sep 17, 2007
LUXEMBOURG (AFP) — A top European court on Monday handed Microsoft a surprise defeat in its epic antitrust battles, backing the European Commission's 2004 record fine of 497 million euros (690 million dollars) against the software giant.
Against expectations for a split judgement, the European Court of First Instance, the EU's second highest tribunal, upheld most of the European Commission's ruling against the US company.
Microsoft general counsel Brad Smith said the company would "study" the ruling before deciding to appeal, but would take "additional steps" to comply with the decision.
"The decision is a disappointing one for Microsoft," a visibly shaken Smith told journalists in Brussels. "We're 100 percent committed to complying with every aspect of the Commission's decision."
The ruling, which Microsoft has two months and 10 days to appeal against, left Microsoft's opponents and the European Commission jubilant.
"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 ubiquitous Windows personal computer operating system to crush rivals in other linked markets, such as media players.
"Microsoft cannot abuse its Windows monopoly to exclude competitors in other markets," EU Competition Commissioner Neelie Kroes said.
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.
In New York, shares in Microsoft lost 0.96 percent to 28.75 dollars in early trading on Wall Street after the ruling.
Microsoft lost on all the major points of the case, winning only a minor victory on the technical issue of the independent trustee who was appointed to oversee the company's implementation of Commission ruling.
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 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 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 products 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.
Any appeal against the court's decision could take up to three years before a new judgment would be handed down, according to legal experts.
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