Europe and US try to calm Microsoft storm

By David Lawsky

NEW YORK - European and US antitrust regulators have tried to calm a transatlantic storm over a European Court ruling that Microsoft used monopoly power to muscle rivals, but did not back down over policy differences.

European and US officials were careful at the high- profile Fordham antitrust conference to avoid antagonising each other after a sharp exchange last week between US Department of Justice antitrust chief Thomas Barnett and European Competition Commissioner Neelie Kroes.

Last week, the European Union's Court of First Instance in Luxembourg upheld a landmark 2004 European Commission decision and a 497 million euro ($NZ933m) fine against Microsoft Corp for illegal business practices that violated antitrust law.

At the conference on Thursday, US Federal Trade Commission Chairman Deborah Majoras said a European Court had explicitly rejected the US approach, and Brussels and Washington now needed to find better ways to co-operate.

Majoras had a hand in fashioning the US remedies against Microsoft in 2001 after the company was found to have violated US antitrust law. The US remedies requiring limited licensing of some Microsoft connection information - far less than the Europeans - won approval from US courts.

But some states have criticised the US sanctions as ineffective.

Majoras said Europeans and Americans need to aim for "co-operation and enhanced discussion" about their antitrust treatment of individual company behaviour.

Her carefully calibrated remarks contrasted with those of Barnett, her counterpart at the Justice Department. Hours after the Microsoft ruling, he issued a news release accusing the European court of "chilling innovation and discouraging competition" with its 248-page decision. That brought a stinging rebuke from European Competition Chief Neelie Kroes.

The rebuke was echoed in milder terms after Majoras spoke on Thursday, when British Office of Fair Trading Chief Executive

John Fingleton said: "The other point that's important to recognize in this is respect for different jurisdictions' autonomy."

Fingleton called convergence a "two-way process" and suggested that US courts had emasculated US agency power by throwing out a Justice Department case against American Airlines that accused the carrier of lowering prices to drive a low-priced airline out of business.

"It really is going to be quite difficult ever to find true predatory pricing liability in the United States with the case law that's there," he said.

At one point, the No. 2 official of the European Commission's competition department spoke up from the floor.

"On this question of convergence ... We have to make efforts here," said Philip Lowe.

But he strongly defended the care his agency used in gathering facts against Microsoft and questioned how long an agency should wait to act.

"We're talking about a long lasting position of dominance," he said. "Is 10 years too short or too long? Is 15 years too short or too long?"

Kroes, speaking later, also urged cooperation between US and European regulators, as well as respect for differences between the two.

"We have looked with interest at the way you have tackled ... issues over here and have drawn some useful lessons from your experiences," she said. "In this as in so many other areas, there is a very broad degree of consensus across the Atlantic about the problems to be addressed, even if the solutions we design are not always exactly identical in every detail, reflecting our different geopolitical environment, legal tradition and culture."

- REUTERS

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