Microsoft Corp may seek to draw out negotiations over European antitrust penalties to put pressure on Competition Commissioner Mario Monti to settle the case before his term ends next year, lawyers and analysts said.
Monti set up the last battle in his antitrust career by deciding Wednesday to give the world's largest software maker a "final" chance to answer charges that it is abusing its Windows monopoly and using its Media Player to hamper competing programs such as Apple Computer Inc's QuickTime.
"It was a bold move, and as with all bold moves, there are dangers," said Martin Coleman, an antitrust lawyer at Norton Rose in London. "There are clear pressures between the prospect of Monti's retirement and the need for proper processes to be followed."
Monti, set to leave office late next year, is trying to rebuild European trustbusters' authority after an appeals court quashed European Commission decisions to veto three takeovers worth US$11 billion.
On Wednesday, Monti said he had new evidence to support his four-year-old fight with Microsoft, citing surveys of film and music companies. That started a process that gives Microsoft two months to file its first reply, gives the company a right to hearings, requires consultation with competitors and is subject to court challenges.
The European case "could take several years to complete itself, and in the meantime, the technology will bypass it all again," said Ernest Gellhorn, an antitrust expert at George Mason University law school in Arlington, Virginia.
Redmond, Washington-based Microsoft risks being fined, forced to disclose programming data to competitors and ordered to change the way it sells its music and video software to settle the case, the commission said Wednesday. Microsoft spokesman Jim Desler declined to provide details of Micro-soft's legal strategy.
"Throughout this several-year process, we have worked toward a positive resolution of this," he said. "Wednesday's announcement will require us to respond formally, and we'll do so and continue to maintain a positive dialogue to see if we can resolve these matters."
EU antitrust fines rarely exceed 2 percent of sales, which would be about US$600 million for Microsoft. The limit is 10 percent of sales. Microsoft had US$49 billion in cash and short- term investments and no debt at the end of June.
Microsoft shares fell US$0.07 to US$25.64 at 4:00pm New York time on the NASDAQ Stock Market and have added 4.8 percent in the past year.
The clash with Microsoft is Monti's highest-stakes quarrel with a US company since he barred General Electric Co from acquiring Honeywell International Inc for US$47 billion in 2001.
"Monti wants to finish this before his term expires and is keeping his options open as to how to end the case," said his spokesman, Tilman Lueder. The 20-member Brussels-based commission is considering stepping down a few months before its term ends in December of next year to smooth next May's admission of 10 new countries to the EU.
Time is not on Monti's side. Microsoft has two months to reply to the latest allegations and can ask for a hearing.
Competitors would get another chance to respond. The deadlines are likely to be extended since the commission published the latest charges during its summer vacation.
Only then would the commission, which highlighted its "meticulous respect of due process" in Wednesday's press release, get down to negotiating remedies with Microsoft. It would also need to consult rivals and suppliers about any penalties.
"The addition of a new statement of objections to this process is unfortunate as it lengthens the proceedings," Tiffany Steckler, a Microsoft spokeswoman, said after Wednesday's announcement.
Monti's options are to reach a settlement or force conditions on Microsoft that would almost certainly be appealed to the same court that dealt the merger setbacks and is currently reviewing the General Electric-Honeywell decision.
Microsoft would probably win an emergency injunction against antitrust sanctions from the EU's Court of First Instance by arguing that its business would suffer irrevocable harm, lawyers said. A final court ruling would take three or four years.
Microsoft is unlikely to accept splitting Media Player from Windows because of the precedent that will set for other software under development.
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