Compliance Toolkit

Signs not good for Microsoft in EU case

Jo Best silicon.com

Published: 28 Jan 2004 08:55 GMT

Despite Microsoft chairman Bill Gates picked up an honorary knighthood earlier this week, it looks like an EU investigation into the software company's anticompetitive behaviour is set to rule against Redmond's finest.

While the ruling is still in its draft phase, and details of any final decision are yet to be made public, all the signs are that it won't be going Microsoft's way. The EU's Competition Commissioner, Mario Monti, has been touting the draft resolution over the Windows Media Player dispute around various departments in the EC -- which EU commentators believe rarely happens in cases where antitrust cases go in the company's favour.

While the prospect of Microsoft getting a legal kicking might not cause many tears outside of Redmond, the software company could well be a pawn in a larger political battle. Transatlantic tensions may be affecting Microsoft's treatment at the hands of the EU, according to James Governor, principal analyst at RedMonk.

"The unilateralism of the US will make it harder for the EU to make a sensible judgement. Whatever happens, there will be a lobby in America that will turn around and say Europe is just trying to protect itself, they're afraid of competition and it's an attempt to block Microsoft from succeeding," he told silicon.com. "The situation is exacerbated by the US political situation. The problematic transatlantic relationship is why the EC has worked so hard not to mess it up."

The final ruling will no doubt come as a blow to Microsoft, already in the middle of legal wrangling with US authorities over whether it has broken its antitrust agreement. It's thought that should the European decision go against Microsoft, the penalties for breaking competition regulations could include a fine of up to €3bn, as well as strict edicts designed to alter the way that Microsoft sells its products.

Neil Warick, EU and competition partner at law firm Dickinson Dees, believes that a fine is extremely probable. "A fine is more likely than a behavioural order," he told silicon.com. "It's common sense -- the Commission is understaffed and they don't have the spare bodies to police an order," he said, adding that Microsoft shouldn't expect an easy ride from the EC. "The US legal system is more about plea-bargaining and finding a solution," he said. "In Europe, it's not about finding a remedy, it's about punishing them."

But Governor wouldn't be surprised if the EU didn't a levy some fine, but said he thinks there will be more to any judgement, adding that he expects to see the presence of interoperability in any settlement.

"Don't expect a quick decision" seems to be the message from the legal fraternity -- the investigation itself has already lasted three and a half years and the case is unlikely to come to a conclusion without an appeal from the Gates camp, which has the potential to drag the case out for several years yet. The case even has the potential to drag on for a decade, Warick said.

Once the EU battle is over, it's possible for individual European countries to pursue their own antitrust suits against the company.