IT expert in Microsoft monopoly case faces £2.5m legal fight

A computer expert who advised the European Commission in its investigation into anti-competitive behaviour by Microsoft faces £2.5bn legal battle

A computer expert who advised the European Commission during its investigation into breaches of EU competition rules by Microsoft is facing a law suit for nearly £2.5m.

Neil Barrett's work was instrumental in the European Commission (EC) securing fines of €1.65bn against Microsoft for abusing its dominant position in the PC market.

Now the European Commission is demanding £2.46m in compensation from Barrett, who was appointed as an independent monitor for the EC in the Microsoft case in 2005.

Breach of trust alleged

A legal claim filed in Leeds High Court accuses Barrett of breach of contract and trust, and argues that he should repay millions in fees and expenses to the EC. Barrett denies the accusations and is contesting the case.

According to court documents, the European Commission fined Microsoft €497m in March 2004 after finding the software company had abused its dominant market position.

Microsoft was ordered to disclose the specifications of its server communications protocols to competitors and to offer a version of Windows without the Windows media player.

Microsoft ordered to pay monitoring costs

As part of the settlement, Microsoft was ordered to pay the costs of setting up and running an independent "monitoring trustee" to monitor Microsoft’s compliance with the settlement.

Barrett was appointed as sole director of Monitoring Trustee Limited (MTL) in November 2005. Under the agreement, Barrett’s salary of £250,000 a year and MTL’s start-up costs and running expenses were paid by Microsoft.

But in September 2007, following a legal appeal by Microsoft, the European Court of the First Instance in Luxembourg ruled that the European Commission, rather than Microsoft, should cover the costs of running MTL.

Microsoft fined 

In February 2008, Barrett’s work led to Microsoft being fined a further €889m for failing to meet the 2004 agreement. This was on top of a fine of €280m in 2006 and the original fine of €497m in 2004.

The EC hired auditors Moore Stephens to draw up a report on MTL’s accounts in the months following Microsoft’s 2008 fine. The accountants concluded that MTL had paid Barrett funds that were not claimable under the terms of a Trustee Mandate, agreed by the EC, Microsoft and Barrett.

Disputed fees

The disputed funds include £25,000 in fees paid to Barrett for attending Microsoft’s appeal hearing in 2008, £250,000 in management fees, and £111,000 in fees to Barrett for headhunting 10 specialist advisors for MTL.

Moore Stephens claims that the difference between the money Microsoft paid MTL and Barrett for monitoring work, and the costs spent under the terms of the Trustee Mandate was £2.41m – a sum that the EC says Barrett should repay.

The EC claims that Barrett failed to act honestly and in good faith, abused his position of trust and confidence, failed to avoid conflicts of interest, and received personal profits beyond which he was entitled.

Defence denies claims

Defence documents filed by Barrett contest the European Commission’s claims.

They argue, for example, that the European Commission requested Barrett attend the Microsoft appeal hearing and had arranged his hotel accommodation. The other claims for management fees and other costs were also legitimate, the documents say.

At issue is whether Barrett and the monitoring company were in a “fiduciary relationship” with Microsoft as a result of his monitoring work.

Barrett’s defence team argues that there was no “fiduciary relationship” under the terms of MTL's contract.

Computer forensics

Barrett, who retired in 2010 following illness caused by multiple sclerosis, is best known for his pioneering work in computer forensics. 

Among other high-profile cases, the former University of York lecturer was responsible for uncovering the evidence that led to the conviction of Gary Glitter for paedophile offences in 1999.

The European Commission and Barrett declined to comment on the case.

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