Microsoft EU Battle Over Large Daily Fine

By David Lawsky

Microsoft Corp. formally denied European Commission charges that could lead to 2 million euro ($2.4 million) daily fines in an antitrust case on Wednesday, saying critical evidence had been ignored.

But the European Commission, in an unusual statement, said Microsoft had filed the evidence 11 days after a deadline in December -- once the Commission had already issued a Statement of Objections to fine the company.

The Commission also said it is market testing Microsoft's plans to offer access to source code, the blueprint for Microsoft's software.

The Commission had given the U.S. software giant until Wednesday to explain why it should not be fined for failing to carry out sanctions imposed in March 2004 for using its Windows software monopoly to muscle out smaller competitors.

The company was supposed to provide rival makers of server software with directions to allow their products to interconnect with Windows desktop machines as easily as Microsoft's own server software, used for work-group printer and other tasks.

The Commission said the directions were not workable but the company disagreed in its formal response.


"Microsoft has complied fully with the technical documentation requirements," it said in a nine-paragraph statement about its 75-page confidential filing.

"The Commission has ignored critical evidence in its haste to attack the company's compliance," Microsoft said.

Microsoft said that when the Commission issued the Statement of Objections it and its experts "had not even bothered to read the most recent version of those documents which Microsoft had made available on 15 December 2005."

The Commission flatly rejected Microsoft's contention, saying documents were available only at the company's headquarters in Redmond, Wash.

Microsoft's obligation was to present the Commission in Brussels with evidence that it had complied and that was not done until December 26, the Commission said.

In any event, the Commission said the revised documentation was essentially the same as the earlier, problematic version.

Microsoft also exercised its right to an oral hearing that must be held before the Commission decides whether to impose the fine. The Commission said that would be in the coming weeks.

The company said part of the problem was that the Commission "repeatedly refused to clearly define its requirements and concerns, despite repeated requests and accommodations by Microsoft."

One approach Microsoft took to deal with that was to offer to show its source code to licensees.

The Commission said the source code license is being tested with customers and evaluated by the monitoring trustee, chosen by the Commission from several nominated by Microsoft.

Even before Microsoft put forward the idea, the trustee had no enthusiasm for it, saying in the Statement of Objections: "I comment that source code was never asked for nor indeed welcomed as a part of an explanatory document."

The trustee also called Microsoft's documentation "fundamentally flawed."

Microsoft responded to that with two reports by professors it employed and labeled as "independent experts," that it said show the documentation met industry standards.

In addition, Microsoft said that much work had gone into the documentation.

"Hundreds of Microsoft employees and contractors have worked for more than 30,000 hours to create over 12,000 pages of detailed technical documents that are available for license today," the company said.

Copyright 2006 Reuters Limited.

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