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Microsoft Wins Two-Month Breather on EU Sanctions
Monday, June 28 2004 @ 05:58 AM EDT

The European Union has granted Microsoft's request, filed on Friday, to put sanctions on hold while the company gets a chance to present evidence that the particular sanctions would irreparably harm them and that they couldn't be made whole at the end of the appeals process. It is predicted by EU spokeswoman, Amelia Torres, that it will take about 2 months for this matter to be heard. Sanctions were supposed to go into effect today.

If they persuade the court, then sanctions could be put on further hold while the appeals process goes on, something that could take a couple of years. Unfortunately, legal documents in EU courts are not made public, according to the Washington Post's Jonathan Krim's account [reg req] and Declan McCullagh's on ZDNet. This doesn't seem to be a signal that the commission is changing its mind.

Here's a statement from Mario Monti, from the eWeek report:

"EU antitrust chief Mario Monti signaled he was not backing down.

"'The Commission believes that the remedies are reasonable, balanced and necessary to restore competition in the marketplace and that there is a strong public interest in favor of implementing them without waiting for the judgment on the substance of the case,' the EU head office said in a statement.

"It said it agreed to a temporary lifting of the order only 'in the interest of a proper administration of justice.'"

It's not unusual for a defendant to be given a breather while there is an appeal of an aspect of a ruling in such a circumstance, and this ruling can be appealed to the European Court of Justice, the highest EU court, kind of like our Supreme Court, by the Microsoft opponents too, for that matter, although I haven't heard that they are. If you think about it, putting yourself in the place of the defendant, it's what you'd want for yourself if you thought the court had made a mistake and you wanted a chance to be heard. What Microsoft reportedly asked for was two delays: the one they have been granted, which they filed on Friday night, and also a long-term delay of sanctions, asking the court to let them do business as usual while the appeals process works its pokey way through the courts, which they filed on June 8. What they were granted was the former, and a chance to prove they need the latter. They haven't been let off the hook, though you will see articles saying that. Think of it as the warden granting a temporary reprieve while the court makes sure they really want to electrocute the prisoner. Microsoft filed new information with the court:

"Microsoft's filing also includes new data on the digital-media marketplace. It notes that Apple's iTunes European music service, which debuted June 15, sold 800,000 songs in its first week.

"Microsoft also submitted reports showing that every large PC manufacturer in Europe and the United States bundles competing media players with their machines ó including RealNetworks.

"Smith also noted that U.S. antitrust sanctions are having an effect. Taking advantage of a provision that enabled PC makers to customize Windows, Dell, Hewlett-Packard, Gateway and IBM have all made Musicmatch's competing media player the default player on their machines, he said."

If any of that proves true, and bear in mind that RealNetworks and others have asked to be heard on the matter and can be expected to argue that it doesn't hurt any company to abide by antitrust law, then it might influence the court to ease up a bit, on the grounds that the market is already dealing with the antitrust issues. Of course, that is what Microsoft hopes they will conclude. But what they have to prove is that it has a prima facie case in law, meaning they can make a reasonable case, and that it would suffer "serious and irreparable harm". The part that really seems to be bothering them, aside from the Media Player sanction, is the sharing of proprietary interoperability information rival server makers need to compete with them according to Reuters:

"'Once Microsoft releases code under this decision, those intellectual property rights are lost forever, even if the court grants our appeal,' the company said."

The EU decision is here [PDF] if you wish to review it. Microsoft's statement is here and it no doubt reflects pretty much what they will argue to the court, except it will be in legalese:

"The Commissionís case seeks to create new law that would chill innovation and economic growth. This new law is untested and it is prudent that the Commissionís remedies be put on hold until the new legal principles have been fully assessed by the Court. The sweeping nature of the proposed sanctions reinforces this point. Once Microsoft releases software code under this decision, those intellectual property rights are lost forever, even if the Court grants our appeal. And once Microsoft releases a degraded product without media functionality into the market, you cannot pull the product back. Once IP is published and once products are released, they cannot be taken back."

If you are interested in the PDF longer version of their reaction to the EU decision, here it is.

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