Microsoft Faces Antitrust Proceeding in Europe

BRUSSELS —  The European Union added to Microsoft’s legal woes Thursday, opening an antitrust case alleging that the software giant is abusing its market position in operating systems to dominate the market for server software.

The European Commission, the EU’s executive arm, started the proceedings after a complaint from Sun Microsystems, which accused Microsoft of breaching antitrust rules by engaging in discriminatory licensing and refusing to supply essential information on its Windows operating systems.

John Frank, Microsoft’s legal director for Europe, said Sun Microsystems’ complaint “is based on its desire to gain access to our technical trade secrets.”

“We don’t believe that the law requires Microsoft, or any other company, to share its secrets with direct competitors,” he said.

Amelia Torres, spokeswoman for EU Competition Commissioner Mario Monti, said the EU has sent what is called a statement of objections to Microsoft, which now has two months to reply. After that the commission has a few months to make a formal decision, but that is unlikely before the end of the year, Torres said.

“The commission hasn’t come to any conclusions,” she said, but it is taking the allegations of misconduct seriously. “The commission obviously wouldn’t send the statement of objections unless it had good evidence of misconduct.”

If the EU concludes there is antitrust abuse, it could fine the company up to 10% of its annual global sales. However, in practice, EU fines have never exceeded 1%. Microsoft has annual revenue of $23 billion.

The EU is looking into allegations that Microsoft “extended its dominance in the PC operating systems market to the server operating systems market.” A server is a computer or device on a network that manages network resources.

The EU case differs from the U.S. Justice Department antitrust case, which claimed Microsoft protected its dominance in PC operating systems through measures aimed at weakening rival systems. A U.S. federal judged ordered Microsoft broken in two and imposed restrictions on its business practices. That decision is under appeal.

In February, the EU opened another case against Microsoft following complaints from competitors that it abused its dominant position. That case, involving Microsoft’s Windows 2000 software, is still being investigated.

Torres said the two cases might be merged if there is an overlap of the issues.

Sun Microsystems says Microsoft’s near monopoly--95% of the market for PC operating systems--”creates an obligation for Microsoft to disclose its interfaces to enable interoperability with non-Microsoft server software,” the EU said.

Microsoft replied in a statement that it already makes available its software coding and other information necessary for competitors to make server software that will operate with its market-leading Windows PC software.