MS ANTITRUST - US diplomats intervene in EU case

US diplomats are urging the European Commission to be fair to Microsoft as it considers imposing fines on the company in the EU's ongoing antitrust case.

As it makes a final effort during two days of hearings to avert daily fines of up to US$2.4 million in its ongoing antitrust fight with the European Commission, Microsoft Corp. has received sympathy, if not support, from a powerful friend: The US government.

US diplomats have intervened, urging the European Commission as well as all 25 national governments in the European Union to be fair to the company, diplomats and Commission officials said Thursday as the closed-door hearings got underway.

Microsoft has complained frequently in recent months that it has been denied the right to a fair defense in the Commission's continuing antitrust case. Microsoft has also accused the Commission of collaborating with its software industry rivals, and denying it access to what it claims are documents vital for its defense.

According to a memo written by unnamed government officials in Washington, D.C., the Microsoft complaints raise "substantial concerns" about the way Microsoft is being treated in the antitrust case, said a person familiar with the Commission's activities. The memo was distributed to embassies around the E.U. and through the US mission to the EU in Brussels.

Diplomats from the US mission to the E.U. visited the offices of three European commissioners earlier this week. Jonathan Todd, the spokesman for Competition Commissioner Neelie Kroes confirmed that her close aides met with U.S. diplomats this week, and received the memo. He declined to comment on its content.

US diplomats are also understood to have visited the offices of Internal Market Commissioner Charlie McCreevy and Commission Vice President Gunter Verheugen, according to a person familiar with the Commission's activities.

A US diplomat denied that the government is coming to Microsoft's aide in its antitrust dispute. "Our interest is less that than wanting to see that everything is done properly," the diplomat said on the condition of anonymity.

"We are careful not to take a position on the accuracy of Microsoft's accusations, but if they were true they would be a matter of concern," the diplomat said.

This isn't the first time the U.S. government has intervened in the European antitrust case against Microsoft. "There was frenetic political activity in the build-up to the March 2004 antitrust ruling," Todd said.

Tom Brookes, Microsoft's spokesman in Brussels, was unaware of the intervention when asked for comment Thursday.

The action in the Microsoft case came as the company's top lawyers arrived in Brussels to make a final attempt to convince the regulators not to impose daily fines on the company.

The Commission has accused Microsoft of failing to provide technical documentation about its Windows operating system, which it is required to reveal under the 2004 antitrust ruling.

In addition to fining the company Euro 497 million in 2004, the Commission ordered Microsoft to reveal information that rival makers of server software need in order to make programs that work properly with Windows. The regulator argued that by withholding this information, Microsoft was giving an unfair advantage to its own server software programs, which function seamlessly with PCs running Windows.

The Commission also forced Microsoft to release a version of its Windows OS without Media Player software.

"We are in compliance," Brad Smith, Microsoft's top lawyer told journalists at the end of the first day of hearings with the Commission and rival software companies.

"We are committed to doing everything in our power to find a solution to this impass," he said. He declined to comment on the hearing itself.

Microsoft made most of the presentations during the first day, according to a person in the room who requested anonymity.

"Microsoft appeared to be urging the European regulators to come back to the negotiating table," he said. "Their lawyers mention the success of the settlement with the Department of Justice at least 15 times during their presentations today."

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