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April 23, 2007

Microsoft responds to EU complaint as Kroes talks Microsoft breakup

Posted by David Hunter at 1:43 PM ET.

Microsoft formally responded today to the European Commission charges that they are charging too much for the interoperability information they were forced to make available to competitors:

Microsoft met a deadline for responding to European Union charges in its long-running antitrust dispute, the company said Monday, and called for regulators to clarify how much it can charge rivals for Windows server information.

“We need greater clarity on what prices the (European) Commission wants us to charge,” said Brad Smith, Microsoft Corp.’s general counsel.

There were some previous rumors that the price the Commission had in mind was $0, but I suppose it doesn’t hurt to ask.

Microsoft could have sought a hearing with the Commission on the EU’s so-called Statement of Objections but declined the opportunity.

“We believe (clarity) is more likely to come from a constructive conversation than from a formal hearing,” Smith said.

Microsoft has complained that the treatment it receives from the 27-nation EU is unmatched around the world and hurt Europe’s efforts to become a thriving high-tech economy.

Not coincidentally, Euro competition czar Neelie Kroes feels the same way about Microsoft and has been threatening to use the big stick of “structural remedies” which means breaking up Microsoft to us regular folks:

Microsoft may face a new kind of antitrust punishment from the European Union if the company, already hit by multi-million-dollar fines, continues to defy it, the bloc’s top competition official hinted.

Competition Commissioner Neelie Kroes — referring to Microsoft — said that when a company repeatedly failed to comply with Commission orders it might be time for a new tack.

“It could be reasonable to draw the conclusion that behavioral remedies are ineffective and that a structural remedy is warranted,” she said in a transcript of remarks made last week and provided by her office on Monday.

She said the possibility of structural remedies was specifically mentioned in European law.

At the request of the U.S. Justice Department a federal judge ordered Microsoft broken up in 2000, but his decision was later thrown out by an appeals court.

While Microsoft is a USA corporation, the European Commission has significant power over companies that do business in Europe and occasionally exercises them, the most famous case being the breakup of the GE acquisition of Honeywell in 2001. Whether Kroes could mandate a Microsoft breakup is a question that neither party likely really wants to explore, but it’ll certainly liven up the proceedings.

Filed under Antitrust, General Business, Governmental Relations, Legal, Microsoft

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One Response to “Microsoft responds to EU complaint as Kroes talks Microsoft breakup”

  1. Bob Says:

    Somehow, I’m guessing that having suggested $0, the EUC will stop short of actually putting that on paper. MSFT legal could use some education on subtlety – their goal of tying the EUC down to a $0 request is pretty transparent and I doubt the EUC is stupid enough to bite.

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