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Wednesday, 22 March, 2000, 17:07 GMT
Microsoft's cable plans under scrutiny
EU competition commissioner Mario Monti
Mario Monti fears Microsoft could dominate digital set-top boxes
The European Commission has said it will extend its anti-trust probe into Microsoft's bid to buy 29.7% of UK cable company Telewest Communications.

Competition commissioner Mario Monti told the European Parliament that he had decided to open "a full second-phase investigation" into how the deal will affect the digital cable industry.

The probe will focus on who makes the software to run the set-top boxes needed to receive the new digital tv channels.

Microsoft is pushing its Windows CE operating system. During the past year, the company has bought stakes in a number of cable companies around the world, and some observers worry that the firm might use its power to make its software the standard of the cable world.

Microsoft bought its stake in Telewest from MediaOne. In a complicated three-way deal, AT&T took control of Media One in return.

The other main share holder of Telewest is Liberty Media Group, which in turn is an indirect subsidiary of AT&T.

The European Commission now has four months to approve the Telewest deal, or block it.

Past experience suggests that the Commission is unlikely to ban the acquisition outright, but will impose a number of conditions to meet competition concerns.

Microsoft and Liberty Media have promised that Telewest will be able to act independently in its choice of set-top box software.

However, for the European competition watchdog this assurance was not enough.

Telewest is the UK's second largest cable operator.

Microsoft is also a shareholder in NTL, which in July 1999 bought the UK's largest consumer cable operation, Cable & Wireless.

The European Commission approved this deal on Wednesday.

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