Microsoft ruling emboldens an increasingly activist EU

The resounding victory cements Europe's role as the lead international regulator of market-dominant companies. The EU persisted with its case even as the US Justice Department settled in 2001 and many of the original plaintiffs dropped out.

"In global markets, the antitrust policy that matters is the most restrictive one," said M.J. Moltenbray, a partner at Freshfields Bruckhaus Deringer LLP.

In the last two months, EU regulators have charged Intel Corp. and Rambus Inc. with antitrust abuse. This week, it will hold closed hearings in which Apple Inc. will defend itself against allegations that it restricts customer choice with separate national iTunes stores. And Google Inc. will soon have to seek EU approval to take over DoubleClick Inc., a deal some rivals claim will give Google too much power over personal data and online ads.

"The decision very clearly gives the commission quite broad power and discretion," Microsoft lawyer Brad Smith said. "There are many companies in our industry that have a very large market share." He added that the 248-page ruling would actually affect "every other industry in the world."

In Washington, Assistant Attorney General Thomas O. Barnett said the ruling could harm consumers and discourage competition.

"In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors," he said in a statement. "In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously."

EU Competition Commissioner Neelie Kroes was dismissive of "scare stories" that the court decision would herald disaster for technology companies wanting to protect their innovations.

"There is one company that will have to change its illegal behavior as a result of this ruling: Microsoft," she said.

She added that yesterday's victory was bittersweet because customers have no more choice than they did three years ago when Microsoft was originally fined.

Kroes refused to say what implications the decision would have on other legal fights between the EU and Microsoft, particularly one related to its recently released Windows Vista operating system.

Microsoft's rivals have raised issues with Vista's bundled security software, its integrated Internet and desktop search, and digital rights management tools used to protect copyrights.