Microsoft Answers EU Antitrust Complaints

BRUSSELS, Belgium (AP) - Microsoft Corp. (MSFT), under threat of 2 million euro ($2.38 million) a day in fines, on Wednesday answered European Union complaints that it had failed to comply with an antitrust ruling by outlining a list of its own accusations.

The software maker filed a 75-page response to the EU's formal charges right on the day of the deadline, outlining its complaints that the European Commission had ignored key information and denied it due process in defending itself.

"The Commission repeatedly refused to clearly define its requirements and concerns, despite repeated requests and accommodations by Microsoft," the company said.

The EU was expected to make a statement later Wednesday to confirm it received Microsoft's response.

In March 2004, the EU levied a record 497 million euro ($613 million) fine against Microsoft, ordering the company to share technical data that would allow rivals to make their programs compatible with Microsoft. In December the EU said Microsoft was proving intransigent about complying and threatened to impose extra daily fines.

Microsoft said it had "complied fully with the technical documentation requirements."

"Hundreds of Microsoft employees and contractors have worked for more than 30,000 hours to create over 12,000 pages of detailed technical documents that are available for license," the company said in a statement.

An independent monitor had found that the documents Microsoft provided last autumn needed a drastic overhaul.

Computer science professor Neil Barrett wrote a critical report about the company's efforts to comply with the EU's ruling, saying he and a colleague had been unable to use Microsoft's instructions to make rival software work with Microsoft servers.

Microsoft said the EU had been slow to tell it about the problems and EU officials in Brussels had not bothered to read documents Microsoft made available at its U.S. headquarters days before the EU filed formal charges on Dec. 21.

"The Commission waited many months before informing Microsoft that it believed changes were necessary to the technical documents, and then gave Microsoft only a few weeks to make extensive revisions," the company said in its filing.

The software giant claimed the European Commission had ignored important evidence in its haste to attack the company's compliance. It said it handed regulators two independent expert reports by five British and German software system engineering professors claiming that Microsoft's technical documents met complex industry standards "particularly in such a complex domain."

Microsoft would not name the experts but said they were "independent and credible."

Last month Microsoft offered to let competitors examine some of the blueprints to its flagship Windows operating system, saying its source code was the "ultimate documentation" to answer any U.S. and EU regulators' concerns that it might be withholding information.

It also held talks with Barrett and EU officials to improve the technical information and offered to pay for a third-party technical writing company to rework the support manual if the Commission decided that would be constructive.

It said rivals could also have 500 hours, or about $100,000 worth, of free technical support apiece, to help them develop software that worked smoothly with the Windows operating system's communications code, known as server protocols.

The company still must settle EU questions over the fees and patent conditions for the companies that license the software protocols, however.

Microsoft can challenge the EU's decision to withhold documents at its April appeal before the European Court of First Instance, the EU's second-highest court.

Here is the EU response: Brussels, 15th February 2006 Competition: Commission confirms receipt of Microsoft’s reply to Statement of Objection The Commission will consider carefully the response that Microsoft filed today following the Statement of Objections that the Commission adopted on 21 December 2005(see IP/05/1695). That Statement of Objections concerned Microsoft’s failure to comply with certain of its obligations under the March 2004 Commission Decision (see IP/04/382), and indicated the Commission’s preliminary view, supported by two reports from the Monitoring Trustee, that Microsoft had not yet provided complete and accurate specifications of the interoperability information which it is obliged to disclose under the March 2004 Commission decision. It is of course the European Commission that will decide whether Microsoft is compliant with the March 2004 Decision, and not Microsoft. Following the rejection by the Court of First Instance of Microsoft’s request for interim measures on 22 December 2004 (see MEMO/04/305), Microsoft was obliged to comply with the March 2004 Commission decision. Since then the Commission has repeatedly reminded Microsoft of the need to provide complete and accurate specifications. To cite an example, in June 2005 the Commission sent to Microsoft a first report by the Commission’s experts, where very serious doubts were expressed as to the completeness and accuracy of the technical documentation. In assessing the completeness and accuracy of the technical documentation, the Commission is being assisted by the Monitoring Trustee, a reputed British computer science professor whose appointment by the Commission was suggested by Microsoft (see IP/05/1215). In its press statement issued today, Microsoft alleges that neither the Commission nor the Monitoring Trustee had read the latest version of the technical documents ”made available” by Microsoft (in Redmond USA) on 15 December. In fact this documentation was actually supplied on 26 December to the Commission, 11 days after the 15 December deadline and 5 days after the Statement of Objection was sent. As Microsoft's General Counsel had announced in a letter of 15 December 2005 this new technical documentation indeed addressed only "formatting issues" raised by the Monitoring Trustee. It was not therefore substantially different from that which the Commission examined in the context of the Statement of Objections. Microsoft also announced to the press on 25 January 2005 that it was offering a source code licence to all potential licensees. On 10 February 2005, the Commission received a draft source code licence from Microsoft, which the Monitoring Trustee is considering and which is currently the subject of a market test. The Commission notes that Microsoft is not obliged to disclose source code under the March 2004 Commission decision. As Commissioner Kroes pointed out at the time Microsoft made the announcement, source code is not necessarily a solution to respond to Microsoft’s failure to provide complete and accurate specifications. Source code could at best complement the provision of complete and accurate specifications, in line with the Commission 2004 Decision. The onus is on Microsoft to explain in their reply to the Statement of Objections to explain precisely how and why the source code offer is relevant to ensuring their compliance with the March 2004 Decision. Microsoft has requested an Oral Hearing. The organisation of the hearing is a matter for the Hearing Officer, and a hearing is likely to take place in the coming weeks. As in any other investigation, the Commission is fully committed to guarantee due process. After the Oral Hearing and after consulting the Advisory Committee of Member State Competition Authorities, the Commission may then issue a decision for non-compliance pursuant to Article 24(2) of Regulation 1/2003 imposing a fine on Microsoft for every day between 15 December 2005 and the date of that decision. In the case of continued non-compliance, the Commission may then take other steps to continue the daily fine until Microsoft complies with the March 2004 decision. http://www.groklaw.net/article.php?story=20060215202958901

Let's try this again:

Brussels, 15th February 2006

Competition: Commission confirms receipt of Microsoft's reply to Statement of Objection

The Commission will consider carefully the response that Microsoft filed today following the Statement of Objections that the Commission adopted on 21 December 2005(see IP/05/1695). That Statement of Objections concerned Microsoft's failure to comply with certain of its obligations under the March 2004 Commission Decision (see IP/04/382), and indicated the Commission's preliminary view, supported by two reports from the Monitoring Trustee, that Microsoft had not yet provided complete and accurate specifications of the interoperability information which it is obliged to disclose under the March 2004 Commission decision. It is of course the European Commission that will decide whether Microsoft is compliant with the March 2004 Decision, and not Microsoft.

Following the rejection by the Court of First Instance of Microsoft's request for interim measures on 22 December 2004 (see MEMO/04/305), Microsoft was obliged to comply with the March 2004 Commission decision. Since then the Commission has repeatedly reminded Microsoft of the need to provide complete and accurate specifications. To cite an example, in June 2005 the Commission sent to Microsoft a first report by the Commission's experts, where very serious doubts were expressed as to the completeness and accuracy of the technical documentation.

In assessing the completeness and accuracy of the technical documentation, the Commission is being assisted by the Monitoring Trustee, a reputed British computer science professor whose appointment by the Commission was suggested by Microsoft (see IP/05/1215).

In its press statement issued today, Microsoft alleges that neither the Commission nor the Monitoring Trustee had read the latest version of the technical documents "made available" by Microsoft (in Redmond USA) on 15 December. In fact this documentation was actually supplied on 26 December to the Commission, 11 days after the 15 December deadline and 5 days after the Statement of Objection was sent. As Microsoft's General Counsel had announced in a letter of 15 December 2005 this new technical documentation indeed addressed only "formatting issues" raised by the Monitoring Trustee. It was not therefore substantially different from that which the Commission examined in the context of the Statement of Objections.

Microsoft also announced to the press on 25 January 2005 that it was offering a source code licence to all potential licensees. On 10 February 2005, the Commission received a draft source code licence from Microsoft, which the Monitoring Trustee is considering and which is currently the subject of a market test.

The Commission notes that Microsoft is not obliged to disclose source code under the March 2004 Commission decision. As Commissioner Kroes pointed out at the time Microsoft made the announcement, source code is not necessarily a solution to respond to Microsoft's failure to provide complete and accurate specifications. Source code could at best complement the provision of complete and accurate specifications, in line with the Commission 2004 Decision. The onus is on Microsoft to explain in their reply to the Statement of Objections to explain precisely how and why the source code offer is relevant to ensuring their compliance with the March 2004 Decision.

Microsoft has requested an Oral Hearing. The organisation of the hearing is a matter for the Hearing Officer, and a hearing is likely to take place in the coming weeks. As in any other investigation, the Commission is fully committed to guarantee due process.

After the Oral Hearing and after consulting the Advisory Committee of Member State Competition Authorities, the Commission may then issue a decision for non-compliance pursuant to Article 24(2) of Regulation 1/2003 imposing a fine on Microsoft for every day between 15 December 2005 and the date of that decision. In the case of continued non-compliance, the Commission may then take other steps to continue the daily fine until Microsoft complies with the March 2004 decision. EU Commi

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