It's Not Over Yet, Ec Tells Gates

The European commission yesterday fired a shot across the bows of Microsoft, warning that the software firm's US court victory last week would have little bearing on its monopoly investigation.

The comments suggested that the legal challenges to Microsoft's dominance of the industry are not yet over, despite the US antitrust case drawing to a close.

Executives at Microsoft breathed a sigh of relief when Judge Colleen Kollar-Kotelly endorsed the key points of a settlement that found the company guilty of abusing its dominant market position. In doing so she threw out demands from nine US states for tougher penalties.

But Amelia Torres, a spokeswoman for the EC, said the Washington case was not directly comparable to the European investigation. She said: "The competition commissioner, Mario Monti, has been saying for months that our case is quite different from a factual point of view to the case in the US. We also have our own rules to uphold."

The EC is in the final stages of the inquiry but she said it was too early to predict when it would be concluded. Other EU officials have said it will reach a preliminary ruling by the end of the year and a final decision in early 2003.

The EC could impose tougher sanctions on Microsoft and in theory fine it 10% of global sales.

Microsoft also faces private lawsuits from AOL Time Warner and Sun Microsystems as well as the threat of an appeal from the nine US states seeking harsher penalties.

Microsoft lawyers expressed hopes at the weekend that the US ruling would stand as a precedent for investigators in Europe. Horacio Gutierrez, the firm's senior lawyer in Europe, said the US decision was an "important reference point".

Brussels argues that by designing Windows to work best with its own server software, Microsoft is harming rivals who use Linux. The EC is also critical of Microsoft bundling its Media Player in with its Windows operating system.

Judge Kollar-Kotelly said: "Promises have been made that the company will change its predatory practices, which have been part of its competitive strategy." Microsoft shares rose 7% yesterday to $56.90.