Court set to rule on EC sanctions against Microsoft

A decision on whether to suspend the European Commission's anticompetition sanctions against Microsoft Corp. pending appeal is...

A decision on whether to suspend the European Commission's anticompetition sanctions against Microsoft pending appeal is expected to come in the first half of next week, according to a source close to the company.

While Microsoft wants to win the suspension, the decision and the legal findings supporting it are seen more as an opportunity to approach the commission for further negotiations on the case.

"Microsoft is hopeful that the court order will provide an opening for further discussion on how to address the commission’s concerns," said Horacio Gutierrez, Microsoft's general counsel for Europe.

The European Court of First Instance (CFI), in Luxembourg, is expected to release its decision on the request for suspension soon, the source said.

CFI president Bo Vesterdorf is considering whether to delay two sanctions imposed on the software maker when the commission ruled last March that Microsoft abused its dominance in the desktop software market to gain advantages in related markets, such as media players.

Microsoft was ordered to release a version of its Windows operating system in Europe without its Windows Media Player (WMP), and reveal enough server software code to allow rivals to build competing products that work well with Windows. It also levied a fine of €497m (£342m), which Microsoft has already paid; the sum is being held in a special account pending the appeal's outcome.

If Vesterdorf denies a stay on either count, Microsoft would be expected to comply quickly, probably within a couple of weeks. However, both the software maker and the commission are allowed to appeal Vesterdorf's decision, which could delay the outcome further.

Vesterdorf is attempting to stave off a further appeal by supplying a lengthy and thorough judgment that addresses the various legal matters involved, according to the source. It is difficult to get approval for this appeal, and to do so parties must make a convincing case that there are legal matters that have not been adequately addressed.

If Vesterdorf denies the request for suspension of both sanctions, and a further appeal is not requested or approved, the ruling could lead to a significant change in how the software maker supplies products, analysts said. If Microsoft must supply a version of Windows without WMP, it raises questions about how the commission will look at other bundled products, such as the next version of the company's desktop operating system, Longhorn, due in 2006.

Since Microsoft filed the request for a stay of the sanctions in June, it reached settlements with two of its main opponents in the case, Novell and the Computer and Communications Industry Association (CCIA).

When the settlements were announced last month, Microsoft senior vice-president and general counsel Brad Smith said that the agreement with the CCIA "removes the most substantial obstacle" to its settlement of the European anticompetition case.

The last remaining company with broad-based complaints in the case is RealNetworks, which argued that Microsoft unfairly wielded its dominance on the desktop to proliferate WMP, to the detriment of Real's player software.

Representatives for the media software company were not immediately available to comment on the possible impact of next week's court decision.

Scarlet Pruitt writes for IDG News Service

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