EU Rejects Microsoft's Trustee Plan

Microsoft Corp (MSFT) put itself on a collision course with European Union authorities on Wednesday in a dispute over the powers of a trustee who is to make sure the software giant stops violating antitrust law.

The EU executive Commission has ruled that Microsoft abused its monopoly on computer software and told it to change its business practices. A trustee was supposed to monitor that the company lived up to this ruling.

But the Commission said Microsoft's proposal for the trustee was unacceptable, a charge the company rejects.

"We have officially informed Microsoft that their proposal on the monitoring trustee is not acceptable," Commission spokesman Jonathan Todd said. "Essentially they wished to have a veto on what issues the monitoring trustee could examine."

Microsoft immediately rejected the European Commission's (search) interpretation of its own decision.

"We are fully committed to complying with the Commission's decision," Microsoft spokesman Dirk Delmartino said. "All the proposals we are sending to the Commission we believe are in line with the decision."

The Commission, which policies competition in the 25-nation bloc, imposed remedies on the U.S. software giant one year ago -- March 24, 2004 -- along with a record 497 million euro ($654.9 million) fine.

The company was supposed to nominate an independent "monitoring trustee" as part of this decision, to make sure it properly carried out its obligation to sell a version of Windows without audio-visual software and to share information with rival makers of servers.

Microsoft said it will respond to the Commission's charge by an April 11 deadline.

"This is a complex area and we are happy to look at the feedback," Microsoft's Delmartino said, adding the company believes its proposals already comply with the Commission's decision.

The decision says that if the Commission considers Microsoft's proposal "not suitable it retains the right to impose such a (monitoring) mechanism by way of a decision."

Such a decision could come as soon as the end of April if Microsoft refuses to change, a Commission official said.

If Microsoft were to further defy the Commission, it could fine the company up to 5 percent of its daily world turnover, which is about $5 million daily.

But imposing a new fine would be a time-consuming, unusual and complex last resort which would require further charges and findings by the Commission.

Last week, the Commission announced that Microsoft had failed to make an acceptable proposal concerning the market for servers used in offices to operate printers and file access.

Microsoft says the Commission got that interpretation of its own decision wrong, too, and the company's proposal is in line with the Commission's decision.

The Commission also ordered Microsoft to make a copy of Windows available to computer makers without its Windows Media Player (search), so computers makers could choose alternative audio-visual software such as RealNetworks Real Player (search) or Apple Computer's Quicktime (search).

($1=.7588 Euro)