- The Washington Times - Friday, August 31, 2001

BRUSSELS (AP) European Union regulators widened their investigation into Microsoft yesterday, warning that the U.S. software giant may be violating antitrust laws by tying its Media Player into its Windows operating system.

The European Commission also said Microsoft may have used "illegal practices" to extend dominance in personal computers into server markets.

Amelia Torres, a commission spokeswoman, said the EU was not planning to ask for a delay in the start of Windows XP, a new operating system scheduled to hit stores in October, or to seek any other interim measures while the investigation continues.

Unlike U.S. authorities, the EU has no powers to break up a company. If it concludes there is antitrust abuse, it can theoretically fine companies up to 10 percent of their annual global sales, though in practice fines have never exceeded 1 percent.

Microsoft, which is also struggling with antitrust woes in the United States, denied wrongdoing and welcomed the EU's action as progress toward "narrowing and clarifying" concerns.

"This helps us move toward a way to constructively work [together] and resolve the issues," said John Frank, Microsoft's head of legal and corporate affairs in Europe. "We believe our business practices are fair and legal."

The EU's executive arm sent a formal statement of objections to Microsoft stemming from an investigation into its Windows 2000 operating system that started in February 2000. It also merged the probe with another case that began in 1998 and grew out of a complaint from Microsoft rival Sun Microsystems regarding servers.

The Commission sent its objections to Microsoft regarding the Sun case last year and is examining the company's reply.

The latest objections add "a new dimension to the Commission's concerns that Microsoft's actions may harm innovation and restrict choice for consumers," the Commission said.

Microsoft has two months to respond in writing. Mr. Frank said the company would request an oral hearing as well.

A trade group representing Sun and other high-tech giants welcomed the EU's action but said delays would allow Microsoft to keep grabbing market share.

"Unfortunately, while this case has been pending, the competitiveness of the server market has seriously deteriorated," the D.C.-based Computer and Communications Industry Association said in a statement.

The U.S. antitrust case against the software company is focused on determining what penalty Microsoft should face for illegally trying to squelch competitors with business tactics that included bundling its Internet Explorer browser with Windows.

U.S. District Judge Colleen Kollar-Kotelly, in Washington, has set a Sept. 21 hearing to decide how to proceed. She was named to replace Judge Thomas Penfield Jackson, who had ordered Microsoft to be split into two separate companies but was later removed from the case. An appeals court upheld his finding of antitrust violations but overturned his breakup order.

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