EU grants stay on Microsoft sanctions

The European Union’s executive branch, the European Commission, on Sunday temporarily suspended its March competition remedy requiring Microsoft to begin offering a version of its Windows operating system without Windows Media Player, one day before it was due to take effect.

“The European Commission has informed the European Court of First Instance (CFI) that, in the interest of a proper administration of justice, it has decided not to enforce the remedies adopted on March 24 while a Microsoft application for interim measures is being considered,” the Commission said in a statement issued Sunday. The 90-day deadline for Microsoft to supply a version of the Windows operating system without its media player expired on Monday.

The Commission added that it was “not appropriate” to enforce remedies before the CFI made its decision on a temporary stay.

As had been anticipated, Microsoft submitted its request Friday to the CFI in Luxembourg, the European Union’s second highest court, that it temporarily block the Commission’s remedies prescribed as part of its competition decision against the software giant.

“The Commission’s suspension was a very standard process step,” Microsoft’s spokesman in Brussels, Tom Brookes said Monday.

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. The interlocutory order, or temporary stay, from the CFI can come as soon as next week and though there are no set time limits in which the president must decide the matter, it is expected to be issued fairly swiftly. In the meantime, the Commission’s suspension will stay in place until the CFI makes its ruling.

“We believe that suspension is in order and is necessary as the remedies will not only hurt Microsoft, they will hurt many other software development companies and Web site developers who have built products for the Windows platform. Most importantly, they will also harm consumers by limiting choice and degrading the usability of personal computers,” said Horacio Gutierrez, Associate General Counsel, Microsoft EMEA (Europe Middle East and Africa) in a statement Sunday.

The Commission said it still considers its remedies to be “reasonable, balanced and necessary to restore competition in the marketplace,” and should the CFI deny Microsoft’s request for a stay, the Commission will enforce the sanctions “without delay.”

Sources familiar with the case say should the CFI’s temporary stay be granted, it would most likely be valid until September.

In the Commission’s March ruling, it gave Microsoft 90 days before it has to begin selling a version of its Windows operating system in Europe without the company’s audio and video playing software, Windows Media Player, 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, a period which expires July 27. The Commission also fined Microsoft €497 million ($605 million, as of Monday).

Microsoft has declined to reveal if it has been preparing a version of Windows that is free of Media Player or if it could have begun making it available to retail stores and PC makers Monday, but Microsoft’s Brookes said that the company has every intention of honoring the ruling. “We will comply with the Commission’s orders once they become final,” he said.

Should Microsoft be forced to begin selling a version of Windows without Media Player bundled in the software in Europe, there would mostly likely be no immediate change in content availability for different media formats, according to Dan Kusnetzky, an analyst with the research firm IDC, primarily because the move would not change what’s installed on people’s systems around the world.

“It may or may not make a different on what hardware OEMs install either,” Kusnetzky said in an e-mail response to questions. “After all, it takes a while to develop and then test a load image for production. The hardware OEMs are not likely to have developed separate load images yet.”