Microsoft Brings Out the Big Guns

Microsoft launched a last gasp attempt to appease Europe's regulatory authorities yesterday, wheeling out a crack team of lawyers and lobbyists to mollify the European commission.

The software group is facing a fine of up to $3bn (£1.8bn) over allegations that it is abusing its dominant position in the market. Yesterday it defended itself at a hearing in Brussels and issued a state ment denying its commercial practices were suspect.

The hearing, which is expected to last three days and is taking place behind closed doors, represents the company's last chance to stave off regulatory catastrophe in Europe.

It is also a chance for Microsoft's rivals to attack the group, albeit behind closed doors, since they will be allowed to testify.

The EC has been investigating the group for four years and warned in August that it may impose a fine and force it to make sweeping changes to its Windows software.

The hearing is the final phase of the investigation, although it is unclear how much impact it will have. The commission has said in effect that it has made up its mind and believes that Microsoft is continuing to flout EU competition law.

Speaking to reporters on his way to the hearing, Microsoft's general counsel, Brad Smith, described it as "another opportunity to continue our discussion". Asked if negotiations with the commission would produce a settlement, he said: "Hope springs eternal."

The commission's primary allegation is that Microsoft designed Windows 2000 to function better with Microsoft servers in order to squeeze out rivals and that the firm is withholding vital information to prevent competitors remedying the situation. It also alleges that the group's decision to "bundle" its Media Player soft ware with Windows gives it an advantage over rivals.

Microsoft said yesterday it was innocent of all charges. "Microsoft's actions have been pro-competitive and have resulted in products that offer great benefits to European consumers," it said in a statement.

Jonathan Zuck, president of the Association for Competitive Technology, of which Microsoft is a member, accused its rivals of resorting to legal action because they had failed to compete and innovate.