Brussels sends Microsoft warning on market abuse

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The Independent Online

Microsoft's legal problems mounted yesterday when the European Commission opened formal proceedings against the corporation over claims that it has abused its market dominance.

Microsoft's legal problems mounted yesterday when the European Commission opened formal proceedings against the corporation over claims that it has abused its market dominance.

Mario Monti, the European Competition Commissioner, said he has sent the US software giant a warning letter following a complaint from its rival, Sun Microsystems.

Although the Commission said it had not made up its mind on the merits of the case, yesterday's decision to send a statement of objections indicated that there is "good evidence of misconduct", a spokeswoman said.

At the heart of the allegation is a claim that Microsoft has exploited its pre-eminent position in the market for personal computer operating systems to bolster its role as a supplier of server software.

Sun alleges that Microsoft used licensing arrangements to discriminate against rivals and refused to supply information on its Windows operating system.

Critics argue that Microsoft's action have made it difficult for competitors to produce products which are inter-operable with Windows, thereby restricting consumer choice.

In the wake of its legal difficulties in the US, the Commission's action could constitute a significant blow to Bill Gates's empire, which has two months to respond to the charges.

All companies trading within the European Union have to abide by its competition rules and failure to do so can lead to a fine of 10 per cent of global turnover - in Microsoft's case some $2.3bn. However, Brussels rarely imposes penalties of more than 1 per cent.

"The Commission welcomes all genuine innovation and advances in computer technology," Mr Monti said. "However, we will not tolerate the extension of existing dominance into adjacent markets through the leveraging of market power by anti-competitive means and under the pretext of copyright protection."

Earlier this year a US judge ordered Microsoft to split in two at the end of a hard-fought anti-trust case.On this side of the Atlantic, the corporation has been in the sights of European investigators since February, when they launched an investigation into the Windows 2000 product.

The substance of this inquiry, launched after complaints from consumers, small businesses and Microsoft's competitors, is almost identical to the case taken forward yesterday, and the Commission said it is possible that the two could be combined in the future.

Brussels is also investigating whether Microsoft abused its market position to prevent the French software wholesaler Micro Leader from importing Microsoft goods into Europe.

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