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 NEWSEU poised to expand Microsoft legal action By Paul Meller November 21, 2000 2:18 pm PT THE EUROPEAN COMMISSION is planning to combine a new investigation into software giant Microsoft with an existing legal action it opened against the company in August, according to sources familiar with Commission plans.
An investigation into the Windows 2000 operating system launched by the Commission "is almost identical to the [August] case in substance," said one source familiar with the Commission plans, who asked to remain anonymous. He added, "The Commission won't let the uncertainty continue for too long. It could be advantageous to Microsoft to clear up the legal uncertainty ahead of time." The August case against Microsoft was sparked by a complaint from rival Sun Microsystems in 1998. It concerns operating systems Windows 95/98, NT 4.0, and all subsequent updates. Microsoft is accused of abusing its dominant position in the OS market for PCs by giving only partial information about its software to companies, such as Sun Microsystems, that make the powerful servers connecting PCs together in a network. Microsoft filed a written response to this legal action with the Commission on Friday. It can request a hearing with the Commission, which usually takes place a month after written responses have been submitted. The separate Commission investigation examines the same issue but is focused on Microsoft's latest operating system. It would normally take a couple of years for the Commission to reach the point where it would open legal proceedings. By combining it with the ongoing case the Commission could be in a position to rule on all the alleged violations of EU competition law much sooner. The Commission initiated this second investigation in February, but the evidence being gathered contains comments from Microsoft's rivals, as well as from small and midsize IT companies. Both the Commission and Microsoft declined to comment. "Merging the cases would make a lot of sense. It has been done before," said Jacques Bourgeois, competition lawyer with law firm Akin Gump Strauss Hauer & Feld. Bringing the evidence in both cases together "would not only speed up the whole process, [but] the chances of the Commission succeeding would be greater because it would reveal a pattern of behavior," said Maurits Dolmans at Cleary Gottlieb Steen & Hamilton. "Windows 2000 is different from other operating systems like Windows 98," he said. "If the Commission can show that the same problems exist in both, this would indicate there is a strategy behind Microsoft's behavior and show that the negative effects are continuing," he said. Neither lawyer is involved in the cases. The addition of evidence from rivals and small and midsize companies concerning Windows 2000 would strengthen the argument that violations are ongoing, and it would increase the gravity of Microsoft's infraction of European antitrust law, thereby making the company liable for a higher fine, Dolmans said. The Commission may fine up to 10 percent of a company's global annual sales, though it has not gone that far to date. If the Commission did rule against Microsoft in a merged legal case, the fine would be "big enough to make a splash but not so big as to damage the company," Dolmans reckoned. But he added that the fine isn't the most important thing for the Commission. "What it really wants is for Microsoft to make all the necessary information available," he said. Another lawyer requesting anonymity noted that what is at stake is more than just the market for server software, where Microsoft could muscle out the competitors by offering an easy link with PCs using a Windows operating system. "If Microsoft dominates the server software market then that would allow it to take control of work group programs and e-commerce programs that run on server software. Microsoft could then leverage its power onto the Internet," he said. The Commission alluded to this when it opened legal proceedings against Microsoft in August. "Resolution of this case is of the utmost importance as operating systems for servers constitute a strategic sector in the development of a global market for information technology and e-commerce," the Commission said in a statement. The subject matter of the U.S. proceedings against Microsoft and the allegations the Commission is investigating are separate and distinct legal matters. The allegations being examined by the Commission are that Microsoft extended its dominance in the PC operating systems market to the server operating systems market. The thrust of the proceedings launched by the U.S. Department of Justice revolves around Microsoft protecting its dominance in PC operating systems through a variety of anticompetitive measures, including actions aimed at weakening Netscape Navigator Internet browser and Sun's Java programming language. A U.S. court has found that Redmond, Wash.-based Microsoft, by virtue of its conduct, has attempted to illegally monopolize the Internet Browser market and maintain monopoly control over PC operating systems. Paul Meller is a Brussels, Belgium-based correspondent for IDG News Service, an InfoWorld affiliate. SPONSORED WHITE PAPERS 
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