Monopoly guidelines give EU ammo vs. Microsoft

European regulators have justified their antitrust case against Microsoft in new guidelines on policing companies' abuse of a dominant market share.

The latest dispute between Microsoft and European officials focuses on trade secrets. In a 72-page "discussion paper" on monopolies, the European Commission, the antitrust enforcer of the 25-nation European Union, said trade secrets deserve less protection than other intellectual-property rights, such as patents.

"They're using the guidelines to enhance their chances to win the appeal," said Christian Ahlborn, a partner at Linklaters in London who represents Microsoft. "Copying certain bits of Microsoft into the discussion paper is an attempt to conceal the weaknesses of the case."

The Brussels-based commission can take action against companies for abusing their market power, including fines of as much as 10 percent of sales. The regulator found the world's largest software company abused its dominant position in the PC market and imposed a record $596 million fine last year.

Microsoft is appealing the commission's decision ordering it to offer a version of Windows without a video and music player and to disclose information about its operating-system software to competitors.

In a separate appeal filed Aug. 10, Microsoft says the regulator's order that it license information to developers of open-source products violates its trade-secret rights.

The new guidelines specifically exclude trade secrets, such as the source code for Windows, from having the same protection as other intellectual-property rights.

"Even if such information may be considered a trade secret, it may not be appropriate to apply to such refusals to supply information the same high standards for intervention" by the commission as would be necessary for other intellectual-property rights, the guidelines said.

The commission said in its guidelines that a refusal by dominant companies to license their intellectual property can only be considered an "abuse" under "exceptional circumstances."

In August 2003, an EU court forced the commission to drop an order against IMS Health, the world's biggest seller of drug-market data, to license its data-collecting methods to competitors.

In both the IMS and Microsoft cases, regulators are trying to break down barriers in markets dominated by a single company through trademarks and copyright.

Michael Albers, who was in charge of drafting the guidelines, said the commission's paper wasn't written to justify its position in the Microsoft case.

"This is a much wider area than just the Microsoft case," Albers said Monday. "It's taking Microsoft and expanding some of the elements and applying those ideas to other kinds of abuses."

The commission will review responses to its paper in the next three months and may issue more formal guidelines.