MS ANTITRUST : EU close to decision on antitrust ruling

The European Union’s antitrust regulator said Friday it was close to deciding whether to accept terms Microsoft Corp. has offered for complying with an E.U. ruling to offer Windows without Media Player and licence its communications protocols for the network server market.

A spokesman for the European Commission, which decides competition policy for the E.U., confirmed that it has written to PC makers, retailers and IT companies to determine whether they can live with terms offered by the Redmond, Washington, company.

“I can confirm we are testing with market participants the remedies which Microsoft has offered, such as information on interoperability and the terms and conditions of marketing of Windows without Windows Media Player included,” the spokesman said.

The Commission would decide if the measures were in compliance with its ruling in the light of reactions from the marketplace, he said. Under the offer, Microsoft is offering to call its version of Windows without Media Player “Windows XP N,” or possibly another letter. Alternatively, it has suggested calling the package “Windows XP not including WMP” (Windows Media Player).

The Commission has already rejected an offer by the company to call the version “Windows Reduced Media edition” because it would infringe the regulator’s 2004 ruling. This stipulated that the company should not suggest that a version of Windows without WMP was in any way inferior to the standard package.

Three of the four biggest PC makers in Europe told IDG News Service in January that they had no current plans for offering Windows without WMP in their machines.

Third parties have also been asked to comment on the terms that Microsoft has offered for licensing its communications protocols for the network server market.

The Free Software Foundation Europe (FSFE), a group that focuses on defending the interests of open source software users, has said that the terms Microsoft was offering undermines the aim of the original ruling which, they say, was to restore competition in the network server market. They claim that open source software-based projects would be prevented from using Microsoft’s protocols because the company is insisting on a fee-based system, which contains a registration and software activation process. This clashes with the free-access philosophy of the open source community.

Microsoft argues that the terms it had proposed are in line with the Commission’s ruling stating access to the protocols should be on a “reasonable and non-discriminatory” basis but which did not preclude charging for licences.

The Commission spokesman said that they expected to have responses from market participants by the end of the first week of March. Under E.U. competition law, the Commission can decide to ask Microsoft to amend its offer.

The spokesman said that under E.U. law the Commission could impose daily fines on the company of up to 5 percent of its turnover. The fine would be calculated on its earnings in the European Economic Area (the E.U. plus Norway, Iceland and Liechtenstein) during the period it was judged guilty of abusing Windows’ dominant position in the market. However, it was “premature” to talk about this possibility, the spokesman said. Dirk Delmartino, a spokesman for Microsoft, said: “We are fully committed to complying with the Commission’s decision and in our implementation of these measures and in maintaining an open, constructive and professional relationship.” He said that the company had made the communications protocols available for licensing and that the new version of Windows was already available to manufacturers. Delmartino said that as the process went on it “makes sense that the Commission would seek feedback and comments.” He added that the company welcomed the input and was very open to working to improve its implementation of the measures.

In March 2004, the Commission ruled that Microsoft had abused the dominant position of its Windows software to prevent competition in the market for media players and the network server market. It fined the company

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