EU Closes in on Microsoft

The European Union on Monday came one step closer to punishing software giant Microsoft for alleged abuses of its dominant market position. In a closed-door session, representatives from the 15 member states agreed to support the Commission's antitrust office in a draft ruling against Microsoft Corporation that sources say could slap up to $3 billion in fines on the company and force it to change the way it sells its ubiquitous Windows operating system in Europe.

"The member states have unanimously backed the Commission's draft decision," Amelia Torres, spokeswoman for EU Competition Commissioner Mario Monti, told reporters shortly after noon.

The announcement comes ahead of a final verdict scheduled for next week. Barring a last-minute settlement, the EU's executive body is expected to set the size of the fine to be levied against the world's biggest software company and the changes required of its business practices. The decision is then endorsed by an advisory panel -- scheduled to meet on March 22 -- and after that Competition Commissioner Mario Monti will announce what is sure to be the most important ruling of his five-year term.

Clock ticks for Microsoft

Meanwhile, Microsoft's legal team is busy lobbying Brussels in hopes of averting a full-blown conflict.

Much is at stake for the U.S.-based company. A negative verdict from the EU would be the biggest setback for Microsoft since a U.S. judge found it guilty of antitrust violations involving Internet browsers in 2000. A year later the company managed to hammer out a settlement with the Bush administration that allowed it to hold on to its Internet Explorer browser with some conditions.

Antitrust experts in Europe say Monday's draft ruling similarly finds Microsft abused its Windows dominance to gain the upper hand in markets for digital media players and low-end servers. The EU wants to force the company to offer computer manufacturers a version of Windows without its own pre-installed audio-visual Media Player to give rivals like RealNetworks Inc. a fair chance at landing on consumer desktops. It also calls on Microsoft to release more basic server codes for Windows to improve "interoperability" with competing networking software made by Sun Microsystems and others.

Commission seeks remedies

Although the EU could seek fines totaling hundreds of millions in euros, Monti has said he is primarily interested in "market remedies" to redress the unbalanced effects of Microsoft's domination in the PC software market.

The Commission plans to give Microsoft a deadline to change its business practices or face additional action. Microsoft's first move after the ruling is announced next week will almost certainly be to ask the European Court of Justice to suspend any negative decision pending appeal, but legal experts say such an injunction is not automatic.

Unlike in the United States, where a judge makes the initial decision, in Europe the EU Commission hands down a ruling and courts provide an avenue for appeal.