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Microsoft hits EU decision

Giant calls reported fine 'inappropriate'

BRUSSELS -- In a preview of its promised appeal, Microsoft Corp. accused the European Union yesterday of overreaching by including its US business in calculating a record fine of about $615 million for alleged antitrust abuses.

With the EU decision on the software giant due today, trans-Atlantic tensions also began to sizzle as they did the last time the EU took on US corporate giants and blocked General Electric Co.'s planned deal for Honeywell International Inc.

Microsoft's chief European lawyer, Horacio Gutierrez, argued that the EU's reported fine appeared to be twice what it should have been under the European Commission's guidelines to account for the company's global operations. Microsoft does about 30 percent of its business in Europe.

''We believe it's unprecedented and inappropriate for the commission to impose a fine on a company's US operations when those operations are already regulated by the US government," Gutierrez said. The company also argued it could not have known its behavior would infringe on EU law and thus it should not be fined at all.

EU competition commissioner Mario Monti ''has said clearly the reason he wants a decision is to get a precedent, so clearly there isn't one currently," said Microsoft spokesman Tom Brookes.

Commission spokeswoman Amelia Torres declined to comment, saying Monti would address questions today at a news conference after the commission adopts the ruling. Sources familiar with the five-year-old case, speaking on condition of anonymity, said the EU ruling finds Microsoft abused its Windows monopoly, harming consumers and competitors in the markets for digital media and server software.

Microsoft was found guilty of similar monopolistic behavior in the US antitrust case but settled with the Bush administration in late 2001. A US Appeals Court is considering whether that landmark deal was adequate to restore competition.

US companies that do significant business in Europe also are subject to EU law, which authorizes the commission to levy fines for antitrust violations of up to 10 percent of a firm's global revenue.

Representatives from the 15 EU governments approved the fine Monday. A source familiar with the case, speaking on condition of not being identified, said yesterday that it was around $615 million.

Given that the Redmond, Wash.-based company has cash reserves of nearly $53 billion, specialists say the fine is less significant than the changes Monti is seeking in how Microsoft sells Windows, which runs most personal computers worldwide.

The EU is expected to order Microsoft to release more of the underlying Windows code to rivals in the server market, and deliver a version of Windows without its Windows Media Player software in Europe to help competing products reach desktops.

Microsoft has promised to appeal any negative decision and is likely to seek a suspension of any fine or remedies.

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