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EU Court Ruling Major Setback for Microsoft

Microsoft suffered a major defeat in a European Union court that ruled the company must immediately comply with EU sanctions forcing it to change its commercial practices and to sell a stripped-down version of Windows.

The Court of First Instance in Luxembourg upheld penalties imposed in March by the European Commission when it found that Microsoft had abused the virtual monopoly of its computer operating system Windows.

Microsoft asked to have imposition of the penalties delayed, until the entire appeals process is completed. That process is expected to take several years. But the court dismissed Microsoft's request, saying the software giant did not make its case that it would suffer "serious and irreparable damage."

In a statement Microsoft said it will comply fully with the court order. The company also said there were some encouraging elements in the ruling.

But European Commission spokesman Jonathan Todd says the ruling is a victory for consumers and for the anti-trust process.

"Today's order is important because it preserves the effectiveness of anti-trust enforcement, in particular in fast-moving markets," he said.

Mr. Todd says the ruling means that the sanctions ordered by the Commission become effective immediately.

The Commission has told Microsoft to sell a version of Windows without the Media Player audio visual software, and to share protocols with rival computer-server makers. Competitors such as Apple's Quicktime player, and RealPlayer said they were damaged by Windows when it was sold including its own Media Player.

The case has been closely watched in business and legal circles. Damien Geradin, director of the Global Competition Law Center at the College of Europe, says the Commission put a lot of work into the antitrust action.

"It is a very significant case because the main actor, Microsoft, and because of the time that was spent on the investigation," he said. "That was something like five years. And the tough negotiations between Microsoft and the European Commission."

Mr. Geradin also says the case could have wider implications.

"Of course, what Microsoft fears, is that this case could have a kind of domino effect, or spill-over effect, whereby other proceedings would be started elsewhere," he said. "But also the core of the Microsoft system, which is to integrate new functionality into Windows might be disrupted by the Commission decision."

The European Commission also fined Microsoft about $660 million, but the company did not seek to avoid the penalty.