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Microsoft Appeals EU Fine - 2004-06-08

Microsoft has appealed a European antitrust decision that hit it with a record fine and ordered it to change the way it sells its Windows software.

Microsoft has appealed to the European Court of Justice in Luxembourg against a decision by the European Commission in March that imposed a more than $600 million (497 million euros) and ordered the company to change its business practices.

Microsoft lawyer, Horacio Gutierrez, in a statement, said the legal standards set by the commission's decision significantly alter incentives for research and development that are important to global economic growth.

The European Commission, in its earlier decision, accused Microsoft of bundling its Media Player with the Windows operating system and interfering with the competitive process that would benefit consumers in terms of quicker innovation. The commission said that such practices tend to drive rivals such as Real Player out of the market, giving Microsoft an unfair advantage.

Pierre LaRuche, a professor of competition law at Tilburg University in the Netherlands, said this is a must-win case for the European Commission.

"For the commission it is a case that is meant to give some kind of future direction to EC competition policy," he said. "It is meant to indicate the competition policy is going to go in these high technology sectors in the future and the commission has put a lot of energy, according to its own declarations, into making sure that the case will withstand review. So the commission has made this a kind of must-win case. They knew very well that Microsoft was going to appeal it, of course, given the amount of money at stake and the basic issues at stake."

However, lawyer LaRuche said that Microsoft believes it is competitive.

"The proposition by Microsoft was always that Microsoft is a very innovative company and we are paying attention to what our customers want, and we are delivering precisely want they want and that is why we are so successful," said Mr. LaRuche.

In a few weeks Microsoft must offer a version of Windows without the Media Player, but Microsoft is expected to file another appeal in coming days to have this measure and other commission legal remedies suspended, while the appeal is underway. The entire appeal process is expected to take several years.