Microsoft Battles to Avoid Daily Fines in EU Standoff

Facing the threat of daily fines, Microsoft tried to convince EU anti-trust regulators Thursday that the US software giant is meeting their demands to comply with a landmark 2004 competition ruling.

Even before the start of a two-day closed-door hearing, Microsoft came out fighting, saying that new fines would not resolve the long-standing competition row.

"In our view, a fine is not the answer," said Microsoft's top lawyer, Brad Smith, as he arrived for the hearing with the European Commission.

In response, commission spokesman for competition issues Jonathan Todd said that the commission had little choice but to brandish the threat of fines.

"Also from the commission's perspective, fines are not the best way to resolve the conflict but two years after the decision, we have tried all other ways so that Microsoft complies with the decision and it has still not done so," he said.

Microsoft's last chance

The hearing is likely to be the Microsoft's last chance to prove it is complying with the European Commission before regulators slap a daily fine of up to 2 million euros ($2.4 million) a day.

Smith, who is Microsoft's general counsel and is also third in command at the company, led a team of about 50 people including lawyers and computer scientists in its ranks.

"We need clear guidance to find a solution," he said. "Ultimately, the point I think we'll underscore is this: we have complied and we're willing to do more."

Brussels growing impatient

The commission is at pains to force Microsoft to respect a March 2004 anti-trust ruling, in which the company was fined 497 million euros for abusing its dominant market position.

Microsoft was ordered to sell a version of its widely-used Windows operating system unbundled from its Media Player software and to divulge information on its operating system needed by manufacturers of rival products.

Brussels has grown increasingly impatient for evidence that Microsoft will comply and in December threatened to slap a fine, back-dated to December 15, of up to 2 million euros a day on the company.

But the company says that it has offered more than the commission has asked for by promising to reveal millions of lines of Windows computer code for rivals to use to develop programs that work with it.

However, an independent trustee advising the commission has deemed the offer to be "totally useless".

"It's not necessary for Microsoft to go beyond what we are asking for," said Todd. "It would be quite sufficient for them to do what they are supposed to do in accordance with the decision of March 2004."

He also said that although there were firms that found the offer to reveal computer code to be useful, "there are many companies that have told us that the information provided by Microsoft is not suitable."

The European Commission warned that it could open a new front in the standoff with Microsoft if its new delay-plagued Vista operating system did not respect anti-trust law.