Microsoft, EU reach accord on antitrust

BRUSSELS – Microsoft Corp. appears to havereached an agreement with the European Commission that concludes an antitrustbattle that has lasted a decade, Europe’s topcompetition regulator said Wednesday.

A proposal the company offered in July to address charges of monopoly abusewere dismissed as insufficient by the Commission as well as by rivals in thesoftware industry. But the latest iteration appears to have mollified the EC’sregulator.

“We believe this is an answer,” said competition commissioner NeelieKroes in a press conference. 

“I think this is a trustful deal we are making. There can’t be amisunderstanding because it is the final result of a long discussion betweenSteve Ballmer and me,” she added.

The case has occupied Kroes during herentire five-year tenure as Europe’s topantitrust cop, a position she is scheduled to step down from in about a month.People close to the commissioner have said she is keen to conclude the case,but she has always stressed that she would not force a settlement if it was notthe right one.

The new settlement offer addresses charges that Microsoft distorted competitionin its favor in the market for web browsers, by giving its Internet Explorer(IE) browser an unfair advantage over rivals.

It also addresses accusations that Microsoft hides important interoperabilityinformation from rivals, preventing them from competing fairly againstMicrosoft Office, as well as other software products, the Commission said.

To address the browser case the software giant has offered to create a newballot screen inside its Windows operating system that lists a maximum of 12browsers and gives them all exactly the same visibility and ease of use as IE.

The earlier offer was criticized for still granting IE a slight advantage overother browsers on the ballot screen.

Meanwhile, Microsoft has made renewed assurances that it will provide rivals,including open source software vendors, ready access to the interoperabilityinformation they need in order to make products that work properly withWindows, the operating system running over 95 per cent of the world’s personalcomputers.

On Friday the Commission will distribute the new offer from Microsoft tointerested third parties in the case, including rival software manufacturersand consumer groups. They will have one month to comment.

Kroes said she is sure some of Microsoft’s rivals will not be satisfied by thenew offer. “A number of people are never 100 per cent satisfied,” shesaid.

She said she would take serious criticism of the offer seriously but added thatin her view Microsoft’s offer would restore effective competition. “At theend of the day that’s what we are looking for,” she said.

In a press conference Wednesdaymorning, Microsoft counsel Brad Smith acknowledged that the proposed settlementhelps the company as it looks to address other issues, such as gainingregulatory approval for its search deal with Yahoo. “Until now questionsof competition law in relation to IT have all been about Microsoft but now thatperiod is drawing to an end. We can now look ahead at the competition issues insearch and paid search advertising,” he said. 

Smith also wants to turn his attentionto Oracle Corp.’s acquisition of Sun Microsystems Inc., to which Microsoftobjects. “Today there’s a different industry, a different agenda, andclosure like this of the antitrust dispute lets us think about the broaderissues,” he said.

One outstanding legal issue thatMicrosoft has with the Commission concerns the fines imposed on it for failingto abide by a 2004 antitrust ruling. Wednesday’s rapprochement does not dealwith that. Microsoft has appealed to the Court of First Instance in Luxembourg andis awaiting a date for a hearing. Representatives declined to comment on thematter Wednesday.

The European Committee forInteroperable Systems (ECIS), a trade group representing IBM, Oracle and otherMicrosoft rivals, gave a cautious welcome to the new settlement offer, which itcan’t examine until Friday but will look at closely during the month-longcomment period.

“ECIS notes that the settlementdoes not appear to deal with the inadequacy of Microsoft’s standardscompliance, unfair pricing practices, or other concerns related to patent abuseor standards manipulation,” ECIS Legal Counsel Thomas Vinje said in astatement. 

He also questioned whether Microsoft’soffer to resolve interoperability issues went far enough. “Microsoft’sinteroperability commitment takes the shape of a public undertaking relying onprivate enforcement. Our experience over the last decade has shown thatscrutiny by public authorities is critical to ensure Microsoft’s effectivecompliance and must accompany private enforcement mechanisms,” Vinje said.

ECIS said it’s vital that a settlementincludes “vigorous enforcement mechanisms” such as regular monitoringto make sure that Microsoft lives up to its part of the deal.

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