LUXEMBOURG/BRUSSELS - Microsoft Corp. lost a European Union court appeal Wednesday against sanctions imposed by EU regulators that would force it to change business practices and sell a stripped-down version of Windows.
The Court of First Instance upheld the penalties imposed by the executive European Commission when it levied a record fine in March, finding the U.S. software giant had abused the virtual monopoly of its computer operating system Windows.
"Microsoft has not demonstrated specifically that it might suffer serious and irreparable damage," Court of First Instance President Bo Vesterdorf said.
His order left in tatters Microsoft's push to reach a negotiated settlement as quickly as possible, which would have required the Commission to rescind a major decision for the first time in its history.
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The judgment left Microsoft under orders to sell to computer makers a version of Windows without its trademark Windows Media Player audiovisual software and to share protocols with rival makers of servers.
But the decision by the second highest EU court can be appealed to the European Court of Justice, buying Microsoft another three to eight months, experts say.
Microsoft wanted the penalties, which the Commission suspended temporarily during this appeal, frozen until its court case on the substance of the EU ruling is completed years from now. But the EU executive argued that the market would have moved on and the sanctions would be obsolete.
Microsoft shares traded slightly weaker in late morning trade Frankfurt, down 0.40 percent at 20.07 euros at 5:25 a.m. EST.
Consumer Victory
"This is a victory for consumers," said Thomas Vinje, a Brussels lawyer who represented an industry group which dropped out of the case after a $20 million settlement with Microsoft.
The EU courts have overturned a string of high-profile Commission antitrust and merger control rulings in recent years.
The Commission's sanctions ordered and to share data on protocols- software rules of the road- with makers of work group servers that are used in offices to access files and run printers.
Microsoft had to show that it had a reasonable case, that it urgently needed relief and that the balance of interests between it and the public weighed in its favor.
In the case of the protocols, Vesterdorf said "a number of questions of principle were raised" but "the requirement relating to urgency is not satisfied."
Microsoft did not seek to avoid the 497 million euro ($665.4 million) fine, much less than the billions of dollars it paid this year to settle antitrust cases with other companies.
The Commission ruled that Microsoft bundled its audiovisual player with Windows to damage such rivals as RealNetworks Inc.'s RealPlayer and Apple Computer Inc.'s QuickTime.
It said computer makers should be able to offer a version of Windows with audiovisual software manufactured by those rivals, rather than the Microsoft product.
Microsoft was also ordered to give makers of work-group servers information they needed on protocols so they can make systems compatible with those running on Microsoft software.
Microsoft's main appeal will be heard by a panel of three or five judges of the lower court that will not include Vesterdorf.
additional reporting by Quentin Webb in Brussels
