Brussels Suspends Its Sanctions on Microsoft

BRUSSELS -- The European Commission has temporarily suspended an order requiring Microsoft to sell a version of Windows without media player software, just before it would have taken effect, a source familiar with the situation said Sunday.

The suspension will give a European Union judge breathing space to sort out Microsoft's request for a long-term suspension of EU-imposed changes to its business practices, which the European Commission demanded along with a record $602.8 million fine when it found the software giant broke anti-monopoly law. Microsoft appealed the commission decision to the Court of First Instance in Luxembourg, the EU's lower court, arguing that the commission decision was wrong.

On Friday Microsoft asked for a suspension of the sanctions for as long the case was before European courts, which could be three years or more. All filings before the court are confidential and not available to the public.

"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," Horacio Gutierrez, associate general counsel for Microsoft in Europe, said Sunday in the company's first comment on the filing.

The commission told the court late Friday that it would suspend the sanctions while the court's president, Bo Vesterdorf, decides what to do about the long-term suspensions. Had the commission not acted, Vesterdorf could have issued a temporary suspension order.

The commission ruled in March that Microsoft had violated the law by using its dominant Windows operating system to compete unfairly against rivals.

The commission gave Microsoft 90 days to separate Windows Media Player, which plays music and video over the Internet, from its Windows operating system. The deadline was Sunday.

Under the suspended sanction, it would have been up to computer makers to decide whether to ship Windows with Windows Media Player or with a rival product, such as RealNetworks' RealPlayer.

"Once Microsoft releases a degraded product without media functionality into the market you cannot pull the product back," Microsoft's Gutierrez said.

The commission also gave Microsoft 120 days to license interconnection software to ease the way for rivals to hook up their servers to Windows as easily as Microsoft does.

Microsoft said it wanted to suspend the sanctions because once carried out they could not be undone.

Judge Vesterdorf must weigh three aspects of the case when he decides whether to suspend the sanctions. First, Microsoft must show that it has a reasonable case that can be argued.

Second, the company must argue that its request is urgent and that it will suffer irreparable harm.

"Once Microsoft releases code under this decision, those intellectual property rights are lost forever, even if the court grants our appeal," the company said.

And finally, it must show that the balance of interests involving itself and the general public favors the suspension.

Vesterdorf's ruling may be appealed to the European Court of Justice, the highest EU court.

Microsoft's critics contend that the shoe is on the other foot.

"All the risk in suspension is to consumers and competitors, not Microsoft," the Computer & Communications Industry Association said when it made a filing with the court last week.

It said the suspension would give Microsoft time to tip the market in its favor while the case was being heard.