Microsoft Appeals Antitrust Ruling

Seeking to head off tough antitrust sanctions, Microsoft Corp. has asked Europe’s second-highest court to overturn a multimillion-dollar fine and broad restrictions on the way the company develops and markets software.

The appeal, filed Monday but not disclosed until Tuesday, urges the European Court of First Instance in Luxembourg to cancel a fine of more than $600 million levied against the company by the European Commission. It also asks the court to annul the commission’s March 24 antitrust ruling, which ordered Microsoft to offer computer makers a stripped-down version of Windows and to share more details of its software code with rivals.

The commission ruled that the world’s largest software maker violated antitrust rules by using its flagship Windows software to muscle rivals out of the market for software media players and as well as the market for computer servers that manage PC networks.

But Microsoft said the commission’s decision would hamper technology innovation and unfairly punish successful companies.

“The legal standards set by the commission’s decision significantly alter incentives for research and development,” Microsoft’s chief European lawyer, Horacio Gutierrez, said in a statement released Tuesday.

Those issues are “important to global economic growth,” Gutierrez said.

Microsoft did not release copies of its 100-page appeal. Under European procedure, the filing is considered confidential.

“It’s a real crapshoot; I’d give the EC a 50% chance of winning the case,” said Ernest Gellhorn, an antitrust expert who teaches at George Mason University Law School in Fairfax, Va.

Gellhorn noted that the U.S. Justice Department had publicly criticized the EC ruling. But he also said the EC had painstakingly compiled its case against Microsoft and had made “rather strong findings.”

With the appeal in hand, the head of the Court of First Instance could move to freeze implementation of the EC sanctions. He also could suspend the commission’s entire ruling pending a full appeal before the court.

But even if court officials set up a hearing quickly, experts predict that Microsoft’s antitrust appeal is likely to take three to five years. They also point out that the company has little to lose by pursuing lengthy litigation.

Microsoft rivals, which have long complained that the software giant uses the dominance of its Windows software to take over lucrative new applications such as Web browsers, have expressed concern that by the time all appeals are exhausted, it may be too late to have any practical effect on the technology industry.

If the company loses the appeal, it risks significantly higher manufacturing costs for having to customize a version of Windows for the European market.

The company also could be exposed to private antitrust lawsuits from competitors in Europe and have to pay a fine that amounts to less than an average week’s worth of Microsoft product sales.

Microsoft executives say they are pursing an appeal because they are confident the Court of First Instance will ultimately reduce or throw out the sanctions imposed by the commission.

“The EC has had the first word, but the European courts will have the final word,” Microsoft General Counsel Brad Smith has said.

The Assn. for Competitive Technology, a Washington-based trade group backed by Microsoft, echoed Smith’s view Tuesday, saying “the European Commission has a very weak case and a long history of overturned decisions.”