EU judges to rule on Microsoft 'monopoly'

Now the landmark case has become a trial of strength which will bolster or seriously curb the Commission’s growing anti-monopoly crusade against big companies.

In 2004 Microsoft faced the highest single fine ever imposed by the Commission - €500m for allegedly squeezing out market rivals by selling the Windows operating system only with its own Media Player software.

The Commission ordered the company to start selling a version of Windows without Media Player and to share with rivals the necessary communications codes “at reasonable cost” so that they could market their own software to go with Microsoft Windows.

Microsoft did offer Windows without Media Player, but the company claimed that relatively few sales proved consumers wanted the complete Microsoft package.

The Commission threatened even higher fines after complaints from rivals that they still were not getting sufficient Microsoft codes to enable “interoperability” between different computer operating systems.

And earlier this year, even as a Microsoft appeal was being considered by judges in Luxembourg, the Commission warned of yet more fines for setting fees too high for access to code information.

The European Court of First Instance – a panel of 13 judges at the EU’s second-highest court – has been considering the appeal verdict for 15 months in what is the highest-profile anti-trust case in EU history.

It hinges on to what extent big companies can retain ownership of their technological developments – especially if “bundling” branded software together as a retail package effectively means market domination.

Microsoft says customers want the package, and claim a verdict against the company could stifle innovation.

Microsoft spokesman Tom Brookes said it was a “very significant judgment” because it would answer two key questions: “Firstly, under what circumstances can market leading companies improve their products for consumers?

“And secondly, what rights do market leading companies have to benefit from their own breakthroughs and inventions?”

Mr Brookes went on: “The answers will affect companies far beyond the IT sector and will set precedents that will rule the behaviour of market leaders across Europe for many years to come.

“From Microsoft’s perspective, we hope for some clarity on these issues so we can move forward and work with the Commission and the industry to ensure that the competitive worldwide IT market continues to flourish.”

European Commission Competition spokesman Jonathon Todd said: “The issue is important because so many people use computers, be they individual consumers, schools, businesses or governments, and because 95% of the world’s personal computers run Microsoft’s Windows operating system.

“What is at stake is whether Microsoft can regulate the market by imposing its products and services on people or whether the market is allowed to function properly so that computer users can benefit from choice, more innovative products and more competitive prices.”

He added: “Microsoft has held a near monopoly on the personal computer operating system market for 15 years now. If Microsoft can abuse its PC operating system monopoly to exclude competitors from other markets without constraint, consumer choice and innovation will suffer.

“We want consumers to choose which products they want and through those choices, determine which innovative product wins in the market. Microsoft wants to make those choices for the consumer.

“We have no interest in regulating these markets; we simply wish to ensure that a super-dominant company is not able to regulate these markets to its own advantage, and to the detriment of consumers and innovation.”

Whatever the verdict an appeal to the final arbiter – the European Court of Justice – is likely by either Microsoft or the Commission.