Microsoft to Make EU Dispute Documents Public

By David Lawsky

Microsoft said it was posting on the Web confidential documents used in its defense as it fought the threat of European Commission antitrust fines reaching up to 2 million euros ($2.4 million) a day.

The U.S. software giant planned to post the documents at 1800 GMT on Thursday at

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including an exchange of letters between its chief executive, Steve Ballmer, and EU Competition Commissioner Neelie Kroes.

"Transparency is vitally important in what can be a very opaque process in Brussels. We've decided to open this up so people can understand the issues," said Horacio Gutierrez, Microsoft's European associate general counsel.

The Commission says Microsoft failed to comply with remedies it imposed in

2004 for the company's violation of antitrust rules. Specifically, the Commission says Microsoft failed to produce required documentation in a form that worked.

"Microsoft has ... supplied this documentation in a usable form in accord with industry practice," the company said in the introduction to its documents.

Microsoft is opening defense documents it sent in response to a statement of objections from the Commission, minus business secrets, but has no plans to post the Commission's objections.

The Commission considers those objections confidential and had little to say.


"We are carefully analyzing (Microsoft's) reply and after they have had the opportunity to present their arguments at the oral hearing we will decide whether or not to impose a daily fine," Commission spokesman Jonathan Todd said.

The hearing, as yet unscheduled, will be closed.

The Commission found in 2004 that Microsoft used the dominance of its Windows operating system to damage rival makers of work group server software, used to run printers, password sign-ins and file access for small groups of connected computers.

Microsoft was fined 497 million euros and ordered to provide interconnections so competitors could get their server software to work as well as Microsoft's own with Windows desktop machines.

Microsoft appealed -- that case will be heard by an EU court in Luxembourg in April -- but in the meantime the Commission said the company had not carried out the sanctions.

Microsoft's reply covers a lot of ground, focusing on questions of timing, dealing with criticisms and suggesting an alternative way of approaching the problem.

At least one other lawyer has posted documents to the Web in a case involving the Commission. In 2000, lawyer Stephen Kinsella posted a statement of objections for the International Motoring Federation.

"I took the view that any confidentiality was for the protection of my client. Therefore they could choose to waive that confidentiality. That decision was not challenged by the Commission," Kinsella said.

Kinsella, whose firm Sidley Austin represents an organization that has intervened on the side of Microsoft, said when a case had intense interest it might make sense to provide full access to avoid the danger of selective quotes and leaks.

Microsoft says the Commission's instructions were unclear.

"The Commission went more than nine months without suggesting to Microsoft that the scope of the interoperability information provided was too narrow," the company said, adding that its staff spent 8,000 to 9,000 hours putting it together.

"Microsoft has never refused to supply technical documentation that the Commission has requested," the company said, calling the charges "false, misleading and unfair."

But a Commission monitoring trustee, one of several nominated by Microsoft, as well as competitors and a technical review committee gave Microsoft's documentation scathing reviews. The trustee called it "fundamentally flawed."

The company relied in part on consultant reports to respond.

Imperial College Consultants said neither the trustee nor competitors -- including Sun Microsystems and IBM -- had "devoted sufficient effort" to a sound evaluation of the documentation.

"All the competitors state that they are unable to perform a proper evaluation, before going on to opine of the matter of completeness and accuracy," the consultant said.

More broadly, the company suggested the Commission could look at the process used in the United States, where a court also found that Microsoft had violated antitrust law.

There, a settlement was reached and Microsoft now has 28 licensees. Each month a judge reviews the process, at the same time that both sides work with the Justice Department.

"A similar process could wisely be followed under the (European Commission)

2004 decision as well," the company said.

Copyright 2006 Reuters Limited.

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