Microsoft denies EC accusations

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BRUSSELS -- Microsoft on Monday rejected European Commission charges that it is overcharging rivals for software protocol licenses.

Microsoft denied that it has failed to comply with the Commission's 2004 antitrust ruling, which fined the software giant €497 million ($657 million) for abusing its dominant position in the software market.

However, the company mollified its position in its long-running row with the EU's executive branch, asking for guidance regarding how to set prices on licenses. It also said it will not request an oral hearing concerning the charges, which could result in a new fine against the firm.

"We continue to seek to resolve these recent issues," Microsoft senior vp and general counsel Brad Smith said. "We need greater clarity on what prices the commission wants us to charge, and we believe that is more likely to come from a constructive conversation than from a formal hearing."

The response comes six weeks after the Commission threatened Microsoft with a new daily penalty, of an unspecified amount, if it did not comply with its 2004 ruling.

The landmark ruling ordered the company to provide rival firms with more information about its software in order to help them write programs that could run more smoothly on Microsoft's widely used Windows operating system. It specifically ordered Microsoft to disclose complete and accurate interface documentation on "reasonable and non-discriminatory terms."

Microsoft claims its prices are justified as the data comes from its own patent-protected work. The separate issue of whether the interoperability information is complete and accurate, is still being considered by the EC.

The latest exchange comes as EU competition commissioner Neelie Kroes has threatened unprecedented measures to ensure Microsoft comply with EU antitrust measures. Speaking in Washington on Friday, she said Microsoft's refusal to obey the 2004 order could prompt the EC to consider harsher remedies in future antitrust cases.

The lengthy legal fight with Microsoft has taught officials that more drastic remedies, like a breakup, may be needed for companies that continue to abuse their market dominance, she said.

"We have never, ever before encountered a company that has refused to comply with commission decisions," Kroes said. "We learned we may have to look for a more effective remedy."

Microsoft is appealing the 2004 ruling and a judgment is expected by September. In July 2006, the EC fined Microsoft a further €280.5 million ($380.8 million) for continuing to flout the 2004 decision -- the EC's first ever penalty for failing to comply with an antitrust ruling.

However, Microsoft says that another commission demand in its 2004 ruling -- that the company make a version of Windows available without the Media Player software for music and movies -- has proven worthless. There is "literally zero" demand for a version of Windows stripped of a music and video player, Microsoft deputy general counsel David Heiner said.

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