September 18, 2007	Tuesday	Ramazan 05, 1428

BRUSSELS, Sept 17: Microsoft suffered a decisive antitrust defeat on Monday when a European Union court upheld a landmark ruling that the world’s largest software maker had abused its dominant market position to crush rivals.

The second-highest EU court dismissed the company’s appeal on all key points against the 2004 European Commission ruling and upheld a record $689.9 million fine.

An EU Competition Commissioner Neelie Kroes said the ruling should lead to a “significant drop” in Microsoft’s 95 per cent market share. While Microsoft’s top lawyer said it would affect the way the company markets its products in future.

Shares in the US software giant were down 1 per cent in early New York trade after the Luxembourg-based court’s ruling, suggesting investors were not overly concerned about the implications for Microsoft’s successful business model.

“It’s clearly a major defeat for Microsoft. There is no doubt it will spur the Commission on to regulate Microsoft much more significantly,” said Chris Bright, a British competition lawyer.

The court said Microsoft was unjustified in tying new applications to its Windows operating system in a way that squeezed out rivals and harmed consumer choice.

The EU’s Kroes told a news conference: “The court has confirmed that Microsoft can no longer prevent the market from functioning properly and consumers are entitled to benefit from choice and more innovative products.”

The verdict may be appealed only on points of law and not of fact, and may force Microsoft to change its business practices.

It also gives Kroes a green light to pursue other antitrust cases and complaints involving Intel, Qualcomm and Rambus, and to issue new antitrust guidelines that were put on ice pending the ruling.

Asked how the Commission would assess progress in the Microsoft case, she said: “A market level of much less than 95 per cent would be a way of measuring success ... You can’t draw a line and say exactly 50 (per cent) is correct, but a significant drop in market share is what we would like to see.”

Her spokesman later clarified that a fall in market share would be a logical consequence of fairer competition.

The court endorsed Commission sanctions against Microsoft’s tying together of software and refusal to give rival makers of office servers information to enable their products to work smoothly with Windows. It annulled only the EU regulator’s imposition of a Microsoft-funded trustee to monitor compliance.

“The Court of First Instance essentially upholds the Commission’s decision finding that Microsoft abused its dominant position,” a court statement said.

Microsoft General Counsel Brad Smith called the ruling unpreceden-

ted and disappointing, saying it gave the Commission “quite broad power and quite broad discretion”. But he promised the company would obey it in full.

Smith told a news conference the company had not yet decided whether to appeal to the European Court of Justice.

Microsoft, which had argued that it was entitled to protect its patents and copyright, has used every legal recourse in every case brought against it by governments and regulators.

The company has weathered a series of defeats in antitrust cases in the last decade and sees legal setbacks as almost part of its business model and a price for its near-monopoly.

Microsoft has already moved to new battlegrounds such as seeking to set technical standards across the industry, while bundling more new features into its new Vista desktop software.

Kroes declined to discuss the implications of the ruling for a pending complaint against Vista but said the Commission would have something to say soon.

Rivals welcomed the court verdict as a signal that EU authorities will not allow Microsoft to pursue anti-competitive practices with impunity, and urged Brussels to pursue complaints against Vista.

The Commission ordered the company to sell a version of Windows without the Windows Media Player application used for video and music, which few have bought, and to share information allowing rivals’ office servers to work smoothly with Windows.

A spokesman for Microsoft’s opponents, the European Committee for Interoperable Systems, said the ruling confirmed Microsoft had abused its near-monopoly in computer operating systems and set ground rules for the company’s behaviour.

Another winner was the Free Software Foundation, which makes free, open software for work group servers. “Microsoft can consider itself above the law no longer,” said Georg Greve, president of the FSF Europe.

The judges ordered Microsoft to pay the lion’s share of the costs of the Commission and of business rivals.

Since the original decision, the Commission has fined Microsoft a further 280.5 million euros, saying it had failed to comply with the interoperability sanction. The EU regulator is considering a further fine for non-compliance.—Reuters