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Last Updated: Wednesday, 6 August, 2003, 22:09 GMT 23:09 UK
EU gives 'last chance' to Microsoft
Software giant Microsoft has one last chance to comment before it gets hit by sanctions for abusing its dominant position, the European Commission has said.

"The Commission's preliminary conclusion is that Microsoft's abuses are still ongoing," the EU executive said in a statement giving the company a month to respond.

The Commission, which has been investigating Microsoft for four years, said the US software giant had been trying to crush rivals to its Windows Media Player, and in the low-end server market.

Unless it takes this last opportunity to change its ways, fines are inevitable, according to EC spokesman Tilman Leuder.

We are determined to ensure that the final outcome of this case is to the benefit of innovation and consumers alike
Mario Monti, EU competition commissioner
"We think that we have now a very strong case.

"I would say the case we have is too strong for the company to ignore," he said, adding that the case will now be concluded in "months, not years".

The size of the fine will be linked to the severity and duration of Microsoft's perceived offence, he added.

Microsoft reaction

Microsoft's competitors, including RealNetworks and Sun Microsystems, applauded Brussels' tough stance.

Real Player
The EU's ruling may be good news for Real Player

Sun, which has co-operated with the EC's case against Microsoft, has complained that Microsoft had done little to curb its "monopolistic and anti-competitive practices."

But the markets appeared largely unconcerned by the case, with Microsoft closing down one cent at $25.65.

Some analysts expressed relief that an end appeared in sight to Microsoft's anti-trust troubles.

It could even pave the way for a big dividend payment, one commented, as Microsoft has been hoarding cash to meet potential anti-trust liabilities.

Microsoft has pledged to work with the EC to resolve the allegations.

"We will not speculate on possible outcomes or suggested remedies of the commission but will continue to focus our efforts on responding to the commission's concerns," said Microsoft spokesman Jim Desler in Washington.

"Microsoft takes this investigation very seriously and continues to work hard to maintain a dialogue that will allow a positive resolution to the commission's concerns," he said.

Earlier, Microsoft's lead lawyer in the case said he did not think fines were inevitable.

Mr Gutierrez said Microsoft was unaware EU Competition Commissioner Mario Monti had planned to issue a "statement of objections" on Wednesday.

He said the company had not yet had a chance to "review it carefully".

Forced changes

The EC's accusation against Microsoft is two-pronged.

First, it is accused of unfairly promoting its own media player at the expense of competitors such as Real Player and Apple Quicktime.

The Commission either wants Microsoft to offer a version of Windows without its own media player attached, or offer rival services within its Windows package.

Second, Microsoft is accused of leveraging its dominant position from PCs into low-end servers, the computers which provide core services to PCs in corporate networks.

The EU wants Microsoft to disclose more code to its competitors, to allow them to make sure their systems can work together with Microsoft's rather than being disadvantaged by Microsoft's dominant market position.

"We are determined to ensure that the final outcome of this case is to the benefit of innovation and consumers alike," Mr Monti said.

Different case, different punishment?

Brussels was at pains to distinguish its own case from the long-running one settled earlier this year in the US.

Microsoft was found two years ago to have abused its monopoly, but the sanctions were scaled back by the Department of Justice after the Bush administration took office.

But that case revolved around internet browsers, and tackled the past.

The EU Commission's preliminary conclusion was that Microsoft's abuses were still ongoing.

The BBC's Hugh Pym
"The European Commission's Microsoft investigation has lasted four years"

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