Microsoft cancels Europe competition hearing

Microsoft has cancelled its hearing with European competition officials next month to discuss the European Union's antitrust case against the company, John Frank, Microsoft's chief legal officer in Europe said late Tuesday.

"We asked the Commission to withdraw our request for a hearing," he said, adding that it would be "inaccurate" to say that a settlement is in the offing.

Microsoft was unclear about why it is turning down the chance to present its case orally to competition officials from around Europe, and to hear arguments from competitors also attending the meeting. "We've made that determination," Frank said. The hearing had been scheduled for Dec. 20 and 21.

"We want to devote our energies toward a constructive resolution of the case. We have said that when the Commission is ready we would welcome the opportunity to hold discussions with them to see if a mutually agreeable solution can be found," Frank said.

People familiar with the Commission's investigation were surprised by Microsoft's sudden switch in strategy. "Perhaps they pulled out because they are afraid of scrutiny. Perhaps they aren't willing to have the case exposed to national competition regulators from the member states?" asked one person.

Frank denied that Microsoft was pulling out because it didn't want to expose the details of the case beyond the investigation team within the Commission. Hearings are attended by national competition regulators and companies that are involved in an EU antitrust case. The national regulators are consulted by the Commission before it concludes its lawsuits.

"Everyone with access to the hearing will have access to our written submission and to the Commission's statement of objections," he said.

Microsoft submitted a lengthy written response to the Commission on November 16, in reply to the opening of a new antitrust lawsuit at the end of August. This case merges two previous cases against the company and adds fresh allegations.

The contacts between Microsoft and the Commission since the written response was submitted have been "very limited", according to another person close to the investigation. "I would be shocked if a deal is in the works," he said.

Amelia Torres, spokeswoman on competition matters for the European Commission said the next step is for the hearing officer to decide whether or not there should be a hearing. "The right to a hearing applies both to the defending parties and the complainants," Torres said.

It is possible that a third party might request a hearing, said the person close to the investigation. "They will have to decide whether to do that or to continue with the written responses," he said.

Sun Microsystems Inc. is the main complainant but many other companies have filed their opinions about Microsoft's impact on competition in Europe.

In its statement on August 30, when the Commission opened the new lawsuit against Microsoft, it accused the company of "illegal practices to extend its dominant position in the market for personal computer operating systems into the market for low-end server operating systems."

The fresh allegations concerned Media Player -- the software embedded in Windows that allows users to play sound and video on their PCs. The Commission alleges that Microsoft is illegally tying its Media Player product to the Windows operating system, to the detriment of competing software.

But the case centers on one central issue: interoperability. "The Commission believes that Microsoft may have withheld from vendors of alternative server software key interoperability information that they need to enable their products to 'talk' with Microsoft's dominant PC and server software products," the Commission said in its Aug. 30 statement.

The Commission believes Microsoft may have done this through a combination of refusing to reveal the relevant technical information, and by "engaging in a policy of discriminatory and selective disclosure on the basis of a 'friend-enemy' scheme," the Commission said.

On the same day, Microsoft replied to the Commission's statement, saying it is "gratified that the Commission appears to have narrowed the types of technical information that it believes that Microsoft should disclose to competitors."

Microsoft reiterated that it is committed to ensuring that its products are interoperable with others on the market, and said it "welcomes the opportunity to continue discussions with the Commission on concrete steps that will promote interoperability solutions that meet the needs of computer users."

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