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April 24, 2006

Microsoft and European Commission duke it out in court

Posted by David Hunter at 11:12 AM ET.

Today’s the start of the week long trial before the European Court of First Instance of Microsoft’s appeal of the European Commission’s antitrust judgement against them and observers were getting their money’s worth:

The European Commission forced the world’s largest software maker to offer a product no one wanted and no one bought, Microsoft Corp. told a European Union court on Monday as it began trying to overturn a landmark antitrust ruling.

Microsoft lawyer Jean-Francois Bellis said in his opening statement that the Commission made “fundamental errors of fact and reasoning” in its decision two years ago that the company abused its dominant market position to muscle into media software.

The Commission’s order that Microsoft offer customers a version of its Windows desktop operating system without Media Player — intended to give people a free choice of media software — has been a spectacular failure, he said.

In its core market, no computer maker had shipped a PC or laptop with the media-free Windows XP N version. “Not a single one,” Bellis told the 13 judges.

“The failure to offer a product that nobody wants cannot be an abuse,” Bellis said.

Economist David Evans told the Court of First Instance that the success of Apple Corp.’s iTunes and the Macromedia Inc.’s Flash Player did not bear out EU forecasts.

More than 87 percent of computer users now play media on non-Windows software, Evans said, and PC manufacturers have doubled the number of media players pre-installed on personal computers in Europe over the last two years.

“If the Commission was correct, we should see a steep downward trend,” he said.

I don’t expect there will be updates on Court TV, but it has its own kind of excitement. Here’s the agenda:

The Court of First Instance, Europe’s second highest court, has set aside the whole of this week to hear the appeal, devoting two whole days to the two separate sides of the case plus one day to debate Microsoft’s request for a reduction in the fine.

It’s a big deal for the court. General Electric and Honeywell’s appeal of the Commission decision to block their merger in 2001 was the most recent high profile hearing and that was over in a day.

If time is on Microsoft’s side and the company succeeds in persuading 61-year old Judge Bo Vesterdorf that its behavior hasn’t harmed competition, then it will be able to continue the profitable strategy of bundling new software features into its ubiquitous Windows operating system.

And that’s the crux, because while this case is about what are now older and current versions of Microsoft operating systems, the subtext is that it could bite Microsoft in possibly even more annoying fashion on Vista.

In related news, Microsoft failed in the last of its to subpoena competitor correspondence with the EC:

Microsoft’s request to subpoena IBM in the software giant’s antitrust battle with European regulators was denied by a U.S. federal judge on Thursday.

Microsoft said it does not plan to appeal the judge’s decision.

“The writing is clearly on the wall for these actions, and we are not pursuing them any further,” said a Microsoft representative. “In the last few weeks, the situation has changed. We have received some clarity from the Commission and its monitoring trustee that has been very helpful. Our focus is on working constructively with them.”

And that seems to be the new tack. Previous attempts to subpoena Sun and Oracle ([1]) and for Novell ([2]) also failed.

Filed under Antitrust, Coopetition, General Business, Governmental Relations, IBM, Legal, Microsoft, Novell, OS - Client, Oracle, Sun, Windows Vista

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3 Responses to “Microsoft and European Commission duke it out in court”

  1. Hope for Microsoft at EU trial? -- Microsoft News Tracker Says:

    [...] If, like me, you aren’t overly familiar with the personalities and procedures of European Union jurisprudence, James Kanter has an eye opening article in today’s NY Times about the Court of First Instance where this week’s Microsoft antitrust appeal is being heard. The net is that the court is rather skeptical of the antitrust bureaucrats at the European Commission and regarded as pro-business: In a series of recent cases, the court, which is hearing Microsoft’s appeal in its antitrust case this week, has chastised European Union officials, accusing them of using inadequate evidence to bar mergers, impose fines and force companies to share their intellectual property. Last December, it upheld a decision to block a proposed $42 billion merger between two other United States companies, General Electric and Honeywell International. But it also scolded European officials for making errors and it raised the bar on similar cases in the future. [...]

  2. Microsoft appeals EU noncompliance fine -- Microsoft News Tracker Says:

    [...] As promised back in July, Microsoft is appealing the European Commission’s imposition of an additional fine for noncompliance with their original 2004 judgement against the company: Software giant Microsoft has filed an appeal against a 280.5 million euro ($356.4 million) fine the European Commission imposed in July, holding it defied a 2004 antitrust ruling. … The appeal was lodged with the Court of First Instance in Luxembourg, the second highest European Union court. …The 280.5 million euro fine was on top of a record fine of 497 million euros the Commission imposed in its landmark antitrust decision against the U.S. software giant in March 2004. If you’re having a hard time keeping track, Microsoft also appealed the original 2004 decision to the Court of First Instance, but no decision on that is expected until late this year or early next. There’s no forecast on when this latest appeal will be heard. Filed under Legal, Governmental Relations, General Business, Antitrust, Microsoft [...]

  3. Microsoft EU appeal ruling by September -- Microsoft News Tracker Says:

    [...] This decision had been anticipated in the the first part of 2007 and in case all the EU antitrust actions are running together in one vast blur, the appellate trial before the European Court of First Instance was held last April. There has also been some speculation that the European Commission will take no action on Vista or Office 2007 until the decision on the appeal is rendered. Filed under Legal, Governmental Relations, General Business, Antitrust, Microsoft [...]

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