Microsoft argues EU antitrust ruling was flawed (FT)

Microsoft on Monday attacked the European Commission’s 2004 antitrust ruling as “fundamentally flawed in fact and reasoning”, and called on a panel of senior European judges to overturn the landmark decision.

But the Commission’s legal team hit back, claiming Microsoft was using dubious surveys to bolster its case and arguing forcefully that the regulator’s decision should stand.

Lawyers for the software group had earlier told the European Court of First Instance in Luxembourg that the Commission had failed properly to analyse the market for media players – one of two markets in which Microsoft was found to have violated competition rules.

Brussels argued in its March 2004 decision that by “tying” Windows Media Player to the ubiquitous Windows operating system, Microsoft had illegally undermined competition from other media players and harmed consumer choice.

The finding is crucial not just for the case currently under appeal, but also for the Commission’s future ability to conduct investigations against Microsoft.

Brussels has already raised concerns about the US software giant’s plan to package new functions and programmes – including a web search engine – into Vista, its next operating system due next year.

But Jean-Francois Bellis, a Microsoft lawyer, told the 13 judges at the opening of a one-week appeal hearing, that the Commission had committed a string of errors in its decision on Media Player.

He said Media Player was not a separate product but a vital part of the Windows operating system. Like other desktop operating systems, Windows needed the ability to play back music and film clips, so it was wrong to draw an arbitrary line between the two and force them apart.

This, Mr Bellis added, was borne out by the fact that only 1,787 versions of Windows without Media Player had been ordered since the Commission forced Microsoft to market such a product – compared with the 35m units with Media Player sold in the corresponding period.

“The failure to offer a product that nobody wants cannot be an abuse,” Mr Bellis said.

Microsoft also argued that – contrary to the Commission’s assertions – the market for media players was thriving at the time of the decision, and still thrives.

The group’s experts cited the emergence of rival products such as Adobe’s Flash and Apple’s iTunes as evidence of this.