Microsoft facing last chance to settle EU case

European antitrust regulators are offering Microsoft a last chance to persuade them not to take tough action about alleged abuses of market dominance.

The make-or-break talks in Brussels next month are likely to be the final step before the Commission takes a decision that would bring an end to the four-year investigation into whether the US software group breached European Union antitrust rules.

Unlike the US where Microsoft settled its case with the antitrust watchdog EU competition law does not require the authorities to seek a settlement. But it is understood the Commission wants to explore all possibilities before taking a final decision on one of the most sensitive cases it has handled. Microsoft will have to defend itself against allegations that it used the strong position of its Windows software to gain a stranglehold in markets for video software and servers, big computers used to access the internet.

The regulators are preparing a draft decision that could demand Microsoft separate its video software Media Player from Windows, a move the group strongly opposes. Brussels could also make the firm provide technical data to let rival servers interact with Windows. People close to the case said the Brussels authorities would put their "strong concerns" over the two issues to Microsoft in talks set to start next month. One said: "We will start substantial discussions on a resolution in January." The two sides have been in contact throughout but they have not yet talked about a resolution.

Microsoft has repeatedly said it is willing to talk about how to address Brussels' concerns. In theory, the Brussels authorities could force Microsoft to "unbundle" Media Player and provide information on servers without asking the company first.

The Commission can also fine Microsoft up to 10 per cent of its worldwide turnover if it finds it broke EU competition law.

Competition experts said it was difficult to predict whether the talks would lead to a settlement as the two sides seemed distant. Microsoft would not comment.

The Commission officials on the Microsoft case are believed to have recommended that Mr Mario Monti, the EU Competition Commissioner, take tough action. But Microsoft has repeatedly said separating Media Player would damage Windows, its best-selling product, and accused rivals such as Sun Microsystems of wanting to "clone" its servers.- (Financial Times Service)