Microsoft to ask for EU remedy delay Friday

As part of its ongoing defense against the European Commission’s competition decision earlier this year, Microsoft Friday is expected to ask the European Union’s Court of First Instance to delay the Commission’s remedy rulings against the company from taking immediate effect, according to sources familiar with the matter.

As part of its ongoing defense against the European Commission’s competition decision earlier this year, Microsoft Friday is expected to ask the European Union’s Court of First Instance  (CFI) to delay the Commission’s remedy rulings against the company from taking immediate effect, according to sources familiar with the matter.

The Redmond, Wash., software company has been fighting the March ruling by the Commission – the executive branch of the European Union (E.U.) – that Microsoft violated competition law by using its dominance in the PC operating system market to gain advantage in the markets for media players and work group server operating systems. The Commission fined Microsoft €497 million ($601 million, as of Thursday), but it is widely accepted that Microsoft is less concerned about the fine than the Commission’s measures for increasing competition that it laid out in a 302-page ruling in April.

In the ruling, the Commission granted Microsoft 90 days before it has to begin selling a version of its Windows operating system in Europe without Media Player, the company’s audio and video playing software, and 120 days in which it must reveal enough Windows code to allow rivals to build competing server software that can work properly with Windows.

Earlier this month, Microsoft filed a 100-page appeal brief with the CFI, located in Luxembourg, but the stay request is a separate legal matter.

Microsoft is requesting that CFI President Bo Vesterdorf issue an interlocutory order to suspend the Commission remedies until the CFI decides whether to affirm or annul the decision, a process that is expected to take between three to five years. Legal briefs for both the appeal and the stay request are confidential and will not be made public.

The interlocutory order from the CFI can come as soon as next week, but can in turn be appealed to the president of the Court of Justice. As per the court’s rules, the interlocutory order will have no bearing on the merits of the case, which must be assessed by a panel of CFI judges.

Microsoft critics have warned that should the company be granted its stay request, it could delay the Commission’s enforcement of its ruling long enough to allow Microsoft to establish its dominance in the media player market as well as the server software market, giving Microsoft a de facto victory in its legal battle with the Commission. Should the CFI president turn down Microsoft’s request to suspend the remedies until after the appeal, it will force the company to change the way it does business in Europe almost immediately.

Last April in a paper outlining its position, Microsoft contended that the Commission’s decision – believed by lawyers to be one of the most carefully formulated decisions in its history – in effect creates new law that could have far-reaching negative consequences in the area of intellectual property rights and on the ability of dominant firms to innovate.