Microsoft denies is misled EC investigators

Microsoft denies is misled EC investigators

Microsoft on Wednesday denied it misled the European Commission in its antitrust investigation into the software company, disputing a press report to that effect.

John Frank, a senior corporate lawyer for the company, said an article in the Wall Street Journal was "not correct" when it cited a leaked Commission document alleging that Microsoft has obstructed its investigation.

"We have done nothing to hinder the Commission's investigation. We have cooperated fully," Frank said.

Commissioner for competition Mario Monti acknowledged the leak of the Commission's statement of objections that it sent to Microsoft at the end of August, but he refused to comment on the precise accusations published.

The statement of objections is the starting gun for a Commission antitrust lawsuit. This one follows a previous such statement issued in August 2000. The latest case combines previous accusations with fresh ones alleging that Microsoft abused its dominant position in the operating system software market.

Microsoft has been granted an extension until the first half of November to submit a written response to the allegations in this latest, extended lawsuit, Frank said. "We needed a little extra time for logistical reasons," he said. He added that Microsoft has asked for an oral hearing with European competition officials, which has been tentatively set for December 20 or 21.

The Commission was reported to have alleged that Microsoft falsely presented 34 letters from companies purporting to support its case. The article claims that according to the Commission document, in many cases the letters had been written by Microsoft itself, or the companies were not aware they were to be used as evidence in the case.

"We have filed a great deal of information (to the Commission) regarding what is taking place in the market," Frank said. "But there are no allegations in the statement of objections that these (letters) have been falsified."

Monti dismissed speculation in the article that the Commission would fine Microsoft heavily. "To speak of a fine before Microsoft has even responded is premature," he said, adding that allegations in statements of objections can be narrowed by the time the Commission makes its ruling.

This happened in the antitrust case against DaimlerChrysler AG, which was concluded Wednesday. The car maker was fined just under 72 million euros ($US66 million) for price-fixing and preventing dealers from selling cars to customers from different EU countries. Although this was the third-biggest fine ever imposed on a company by the Commission, Monti said it was smaller than was initially envisaged.

"In the statement of objections sent in 1999 we had a preliminary view that DaimlerChrysler had a general strategy to block parallel trades in its cars," he said. "This could not be proven."

If Microsoft did mislead the Commission, this might push up the size of a fine in the event of a ruling against the company, according to Brussels-based lawyers. "That could be construed as an aggravating circumstance, which could increase the fine," said one lawyer who requested anonymity.

The Commission theoretically can fine a company up to 10 percent of its worldwide revenue in the year previous to the ruling. Microsoft's revenue for its 2001 fiscal year, which ended August 30, was $US25.3 billion. However, the largest fine ever handed out by the Commission, to German car maker Volkswagen in 1998, totaled 102 million euros -- just 0.4 per cent of the company's annual sales in 1997.

The Commission said at the end of August that Microsoft might have violated European antitrust rules by using illegal practices to extend its dominant position in the market for PC operating systems into the market for low-end server operating systems. It also raised concerns about the bundling of its Windows Media Player, which plays audio and video files, into the Windows 2000 operating system.

The latest statement of objections makes no reference to the next Microsoft operating platform, Windows XP, due to become widely available on October 25. Commission spokeswoman on competition issues Amelia Torres repeated Wednesday that the Commission is not currently investigating Windows XP.

The European Commission is the executive body of the European Union. Its responsibilities include regulating competition in the E.U.

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