Microsoft Corp was accused by European antitrust authorities of misrepresenting evidence the biggest software company submitted to rebut monopoly charges, people familiar with the case said.
The European Commission also raised the possibility it would impose a large fine if it determines Microsoft illegally tried to dominate the market for software that powers large computers and illegally tied its Media Player to the Windows operating system, people said. The maximum fine would be US$2.5 billion.
The charge that Microsoft tried to obstruct the EU's investigation was contained in a 70-page statement circulated in August that outlines the case against Microsoft, according to people who have seen the confidential document. The Wall Street Journal reported earlier on the content of the statement.
"We have not done anything to violate antitrust laws or to mislead investigators," said John Frank, associate general counsel for Microsoft Europe. "We are working with the commission" to resolve the case.
The EU said Microsoft presented letters supporting its business practices from companies that hadn't been told the purpose of the testimonials, people said. EU investigators alleged in some cases Microsoft drafted the letters for the companies to sign, the people said. The EU also claimed that Microsoft falsely told the EU that some companies didn't want their letters made public, people said.
European Competition Commissioner Mario Monti said he "regrets" the apparent leak of the charges against Microsoft and promised to investigate how the information became public.
He told a press conference in Brussels it's "premature" to speak of a fine against Microsoft because it's only "a possibility."
The European Commission, the regulatory arm of the 15-member European Union, has the power to force changes in Windows and fine Microsoft up to 10 percent of its annual revenue, or US$2.5 billion. Fines are usually set below that level.
The European Commission expanded its antitrust probe of Microsoft on Aug. 30, accusing the software maker of illegally dominating the market for server software that runs company computer networks.
Yesterday, the US Supreme Court rejected Microsoft's appeal for a hearing in the separate antitrust case by the US government and 18 states, clearing the way for a judge to consider penalties against the company for illegally protecting its Windows monopoly.
The European charges "will put more pressure on Microsoft," said Boris Boehm, a technology fund manager with Nordinvest in Hamburg. "As it showed in the case against GE, the European Commission is trying to show itself as a strict and tough institution."
Microsoft will have an opportunity to respond to the charges at a hearing before year's end, said EC spokeswoman Amelia Torres.
In July, European regulators scotched a proposed US$47 billion merger between General Electric Co and Honeywell International Inc because of antitrust concerns.
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