Microsoft Claims Breakthrough in EU Fines Hearing

By Sabina Zawadzki and Darren Ennis

Microsoft's top lawyer said on Friday there had been a breakthrough in the U.S. software company's dispute with the European Commission at a hearing into antitrust fines ordered by Brussels.

"As I said in the hearing, I believe that we have had a breakthrough," Brad Smith told reporters at the end of the two-day hearing into the Commission's plan to start fining Microsoft 2 million euros ($2.4 million) a day.

The EU's executive, which accuses Microsoft of blocking competition by witholding information on its business software, said it would take its time before deciding whether to proceed with the fines.

"We will take into account what was said at the hearing and the documents submitted before we make a decision," Commission spokesman Jonathan Todd said. "It will take several weeks."

Smith gave little indication of why the company considered there had been a breakthrough, but he said Microsoft now had "greater clarity" on the antitrust case, helping to bring about a solution.

Some rivals of Microsoft said they had heard nothing new from the software giant at the closed-door hearing, run by independent arbitrators.

Thomas Vinje, lawyer for the European Committee for Interoperable Systems which groups companies such as IBM and Oracle, told reporters earlier in the day that Microsoft's defense was "still not good enough."

Microsoft spent most of Thursday presenting its case.


The Commission, which acts as Europe's top antitrust body, found in

2004 that Microsoft abused its dominance of its Windows operating system to muscle competitors out of the market.

It fined Microsoft almost half a billion euros and ordered it to share information with rivals so they can make server software that runs as smoothly with Windows as Microsoft's own.

Despite 12,000 pages of documentation that Microsoft has submitted spelling out how its software works, the Commission says rivals still did not have the right information and it wants to fine the company until it complies.

Microsoft has previously said it has not only complied with the demands, but it is willing to do more.

The case has already raised some U.S. political concerns.

In a letter seen by Reuters on Thursday, the U.S. mission in Brussels urged the Commission to treat Microsoft fairly and said the company's claims of unfair treatment, "are of substantial concern to the United States" if accurate.

Microsoft has accused the Commission of denying it access to documents it says it needs to defend itself against the fines.

Commission spokesman Todd played down the importance of the letter and said Microsoft's antitrust case was not raised when senior European Union and U.S. competition officials met in Washington on Thursday.

Microsoft is not without its supporters.

On Thursday, six companies including Norwegian digital broadcast system maker Tandberg Television said Microsoft's documents were useful and helpful.

The Association for Competitive Technology, which represents more than

3,000 information technology companies including eBay , said the Commission's demands were unreasonable.

"As a software engineer with 12 years of experience ... I know that search for perfect documentation is a search for the Holy Grail," said ACT's president, Mike Sax.

"It is equally true that perfect documentation has never been necessary to create interoperable software," he said.

Microsoft has also offered parts of its vital source code for work group servers as well as 500 hours of free technical support from Microsoft engineers to software developers.

Independent legal analysts say it looks as if the Commission will impose the fines on Microsoft and have called the hearing set-piece theater merely airing old arguments.

Copyright 2006 Reuters Limited.

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Sabina Zawadski & Darren Ennis
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