Microsoft accuses EC of conspiracy, secret negotiations in antitrust affair

Posted by Scott M. Fulton, III

Redmond (WA) - Acknowledging that the European Commission did grant Microsoft access to documents pertaining to the EC's communications with the monitoring trustee it appointed to evaluate Microsoft's compliance with its 2004 antitrust ruling, Microsoft accused the EC, in a Supplemental Response this morning, of secretly collaborating with four companies, apparently to sway the opinion of the trustee.

The names of the four companies in question were legally omitted from a publicly released copy made available by Microsoft today, substituted with the symbols [1], [2], [3], and [4]. Names of counsel and other parties associated with those parties were also substituted with symbols. But recent developments make much easier an educated guess as to their identities. Last week, the Belgium-based trade group European Committee for Interoperable Systems (ECIS) filed a new complaint against Microsoft in the EC, this time charging it with unfair practices with regard to its monopoly over the standard document file formats used in the Microsoft Office suite. This new complaint comes at a time when the affair over the existing complaint - that of Microsoft not turning over documentation explaining how Windows can be made interoperable - may have at last been coming to a head.

The four most vocal participants in the ECIS consortium are IBM, Sun (the original complainant in the antitrust case decided in 2004), Red Hat, and Oracle, although it also represents Corel (in which Microsoft has an investment), Linux OS manufacturer Linspire, Nokia, alternate browser maker Opera, and RealNetworks, which whom Microsoft recently settled out of court. In its Supplemental Response, Microsoft refers to the four companies in question as its "adversaries," reverting its legal language to the "us vs. them" tone that pervaded its legal documents during its antitrust case with the US Department of Justice.

The documents to which Microsoft claims it was denied access, and which the company was finally granted permission to see on 13 February, in the words of today's Supplemental Response, "reveal that the Commission has been conducting its investigation of Microsoft's compliance in secret collaboration with Microsoft adversaries and in violation of its own rules for communication with the Trustee."

Communication between government officials and other companies during antitrust proceedings, including competitors with the defendant, are common, the Response concedes. But the communications turned up in the 13 February documents, claims Microsoft, were unjust and inappropriate. The EC's having allegedly gathered together representatives of Microsoft's four adversaries, along with the monitoring trustee - British security expert Neil Barrett - plus representatives of a British market research firm The OTR Group contracted by the EC as an impartial source, without documenting the content of their discussions for the legal record, compromises both Barrett's and OTR's impartiality, argues Microsoft. "By encouraging and facilitating these communications to occur in the dark, and without any record of the content of the communications apparently being kept," writes the company, "the Commission has prevented Microsoft from knowing whether the content of the communications was distorted or accurate.

"In short, the Commission collaborated with Microsoft's adversaries to undermine the transparency of the monitoring process and to circumvent the principle of equality of arms," Microsoft's Supplemental Response today alleges. As evidence, Microsoft sites an e-mail from an EC case lawyer to a Microsoft attorney, stating that the four companies in question had all been granted licenses to see Microsoft's source code, and that their observations about that code had already been written down in a non-confidential statement to Microsoft. However, alleges Microsoft, no such statement has ever been disclosed to the company, even now, and that if it indeed exists, then Microsoft should have the right to review the statement prior to defending itself.

The laundry list continues with an allegation that the EC arranged so-called "educational" meetings between Barrett and/or The OTR Group, and the four "adversaries," prior to OTR releasing an opinion whose wording strongly resembled a public position already published by the company referred to as [3]. Later, Microsoft discovered an e-mail, among the documents it received on 13 February, from [3]'s lawyers to the EC, advising the Commission that Barrett should not accompany EC representatives during a scheduled upcoming visit to Microsoft headquarters. The response quotes the e-mail as saying, "There is fear at [3] that this will expose too much to MS. It is an appearance issue."

These are just some of the allegations Microsoft makes in its Supplemental Response, including one that the representative of company [1], which the Response describes as "in fact not a competitor in the work group server operating system market that is the subject of the 2004 Decision," and which was granted access to shared source code through the EU's license, was actually not an engineer or developer at all but a professional litigation consultant. An e-mail uncovered by Microsoft, urging the Commission not to extend its deadline for the representative's report on account of his request for a holiday, is quoted as saying that company [1] "has made a large investment in this, so I need to do what is necessary to ensure that you can effectively use the results of our efforts."

Microsoft's complaints, which are directed to the same Commission it complained about, did not suggest any remedy other than the EC providing Microsoft with any documents or communication it may currently be withholding. But the tone of the company's language suggests that it may be compiling a case against the Commission for itself, perhaps as a means to compel the Court of First Instance to initiate proceedings that could lead to the overturning of the entire 2004 EC decision. EC Commissioner for Competitiveness Neelie Kroes, during a seminar concerning digital television standards in Austria today, is quoted by MarketWatch as holding firm, stating, "If we pursue the line we are following now, there will be fines and they won't be small fines."