Microsoft loses appeal of European case
BRUSSELS, Belgium -- The European Union's second-highest court affirmed the EU's nine-year pursuit of Microsoft, rejecting the software maker's appeal and strengthening the bloc's hand as it pushes ahead with cases against other major technology companies.
The European Court of First Instance ruled Monday the European Commission was correct in concluding Microsoft used its dominance in desktop computers to muscle into server software and media players in the 1990s -- and Microsoft still poses similar threats.
It also upheld the record $613 million fine imposed on the company in 2004 -- the largest ever levied by EU regulators.
The resounding victory for the EU -- successful on all but one point -- cements Europe's role as the lead international regulator of market-dominant companies around the world. The EU persisted with its case against Microsoft even as the U.S. Justice Department settled in 2001 and many of the original plaintiffs dropped out.
"In global markets, the antitrust policy that matters is the most restrictive one," said M.J. Moltenbray, a partner at Freshfields Bruckhaus Deringer LLP.
In the last two months, EU regulators have charged Intel Corp. and Rambus Inc. with antitrust abuse. This week, it will hold closed hearings in which Apple will defend itself against allegations it restricts customer choice with separate national iTunes stores. And Google will soon have to seek EU approval to take over DoubleClick, a deal some rivals claim will give Google too much power over personal data and online ads.
"The decision very clearly gives the Commission quite broad power and discretion," Microsoft lawyer Brad Smith said. "There are many companies in our industry that have a very large market share." He added the 248-page ruling would actually affect "every other industry in the world."
In Washington, Assistant Attorney General Thomas O. Barnett said the European ruling "may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition."
"In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors," he said in a statement. "In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously."
EU Competition Commissioner Neelie Kroes was dismissive of "scare stories" that the court decision would herald disaster for technology companies wanting to protect their innovations.
"There is one company that will have to change its illegal behavior as a result of this ruling: Microsoft," she said.
She added Monday's victory was "bittersweet" because customers have no more choice than they did three years ago when Microsoft was originally fined.
"The court has confirmed the Commission's view that consumers are suffering at the hands of Microsoft," she said.
Kroes refused to say what implications Monday's decision would have on other legal fights between the EU and Microsoft, particularly one related to its recently released Windows Vista operating system.
Microsoft's rivals have raised issues with Vista's bundled security software, its integrated Internet and desktop search, and digital rights management tools used to protect copyrights.