U.S. politicos fire at EU's Microsoft ruling

By Declan McCullagh
Posted on ZDNet News: Mar 25, 2004 1:48:00 AM

U.S. politicians lashed out Wednesday at the European Union's decision to seek sanctions against Microsoft, asking regulators in Brussels to reconsider their decision to levy an unprecedented fine of $613 million.

In a letter to European Competition Commissioner Mario Monti, 10 members of the House International Relations Committee said the federal litigation against Microsoft had resolved outstanding antitrust problems and jointly cautioned that it was of the "utmost importance" that the U.S. continue to take the lead in overseeing American companies' business practices.

The letter, signed by five Democrats and five Republicans, noted that "this case involves a U.S. company, that the complaining parties in the E.U. were primarily U.S. companies and that all of the relevant design decisions occurred in the United States." The signers included Robert Wexler, D-Fl., Dan Burton, R-Ind., Adam Schiff, D-Calif., and Steve Chabot, R-Ohio.

A 2002 settlement that arose out of the U.S. Justice Department's antitrust pursuit of Microsoft "established a comprehensive regulatory scheme that not only resolved past conduct, but also created a detailed compliance structure to address future competitive concerns that might arise," the letter said. "This regulatory scheme insures that Microsoft can continue to add new features into its products but allows both users and computer manufacturers to hide these additional features and use competing products instead."

Early Wednesday, the European Union ruled that Microsoft had failed to provide to rivals information they needed to compete fairly in the market and that the company has been offering Windows on the condition that it come bundled with Windows Media Player, stifling competition. The penalties levied include a requirement that Microsoft not give computer manufacturers discounts based on buying Windows along with Microsoft's Windows Media player.

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The House members pointed to a 1991 antitrust cooperation agreement, which the Clinton administration renewed in 1998. "We hope that the outcome of the commission's investigation does not devalue the U.S. Department of Justice's prior settlement with Microsoft and that it respects the principles of international cooperation set forth the in comity agreement," the letter said.

While strongly worded by normal political standards, the letter itself did not explicitly ask that Europe back down. But in an accompanying statement, Reps. Wexler and Peter King, R-NY, went further in their criticism. "It is imperative that we maintain America's competitiveness," King said. "Today's ruling undermines the U.S.-E.U. comity agreement and will deter U.S. companies from participating in European markets. The E.U. should reconsider its ruling."

This is not the first time that the U.S. and the Europeans have clashed over antitrust enforcement. Hostilities erupted after the European Union vetoed the proposed General Electric-Honeywell merger, which U.S. regulators had already approved. President George W. Bush publicly criticized the veto, which was widely viewed as a protectionist move designed to help European competitors such as Airbus and Lufthansa at the expense of U.S. firms.

In addition, U.S. officials sometimes view Europeans as unabashed fans of big government. In November 2001, William Kolasky, deputy assistant attorney general at the time, complained in a speech that the "European Union comes from a more statist tradition that places greater confidence in the utility of governmental intervention in markets."