Negotiations collapse between Microsoft and Commission

The Commission has been investigating Microsoft since 1998, when competitors accused the company of failing to disclose hardware specifications necessary to integrate non-Microsoft software into corporate networks.

In a statement yesterday the Commissioner admitted: "We made substantial progress towards resolving the problems which have arisen in the past but we were unable to agree on commitments for future conduct."

"In the end," he said, "I had do decide what was best for competition and consumers in Europe. I believe they will be better served with a decision that creates a strong precedent.
It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market."

Microsoft also confirmed that negotiations had collapsed. "I believe we reached agreement on the issues of the case," said CEO Steve Ballmer. "But we were unable to agree on principles for new issues that could arise in the future."

"We worked very hard to try to resolve these issues without litigation," Ballmer added. "Because of the tremendous value we attach to our relations with governments all across Europe, we made every possible effort to settle the case, and I hope that perhaps we can still settle the case at a later stage."

The later stage to which he refers could come when Microsoft appeals the imminent ruling to the European Court of Justice – a process that can last three or four years.

The Commission's draft ruling has been circulating Commission offices over the past few months, and reports predict that a fine will be imposed and the Windows Media Player will be untied from Windows. This means that Microsoft would be required to offer its European customers a version of Windows without Windows Media Player.

The ruling is also likely to require Microsoft to reveal more source code, to allow rivals such as Sun Microsystems to achieve full interoperability with Windows PCs and servers, and thereby – at least in theory – compete on a level playing field.

The proposed sanctions received the unanimous backing of the 15 Member States last week, albeit the details remained confidential. A further meeting of Member State representatives is set for Monday, to approve an appropriate level of fine in addition to the sanctions. It is expected that the draft decision will then go before the Commission for formal adoption on 24th March.