Microsoft's reign faces key EU court ruling

(BRUSSELS) - Microsoft's long-running reign over global software markets faces a crucial test on Monday when Europe's second-highest court rules whether an antitrust case by EU regulators against the company holds up.

In what has become one of Europe's biggest legal battles, Microsoft is challenging a March 2004 anti-competition decision by the European Commission and the record fine of nearly half a billion euros that went with it.

While the verdict will bring Microsoft's epic antitrust battles to a new climax, the decision by a special panel of 13 judges at the European Court of First Instance is unlikely to close the book on the case as it can be appealed.

After a year and a half of deliberations, the judges at the Luxembourg-based court will weigh into the high-stakes standoff between the software giant and the European Commission when they hand down their ruling at 9:30 am (0730 GMT).

However, the extreme technical complexity of the case makes it likely that the ruling -- the most important since the court's founding in 1989 -- will not give a clear-cut victory to one side or the other.

"Whoever tries to predict the judgement is smoking dope," said one lawyer close to the case. However, "it's possible that judges give something to both sides."

While a ruling against Microsoft could threaten the group's long-standing business strategy, a decision against the European Commission would deal a painful blow to the credibility of Europe's top competition watchdog.

Both sides will have a little more than two months after the verdict to decide whether or not to lodge a new appeal with Europe's highest tribunal, the European Court of Justice.

Microsoft lodged its challenge with the Court of First Instance in 2004 after Europe's top regulator fined the company 497 million euros (690 million dollars) for abusing its dominant market share.

After a five-year investigation, the Commission took its biggest competition decision ever in March 2004 when it accused Microsoft of breaking EU law by using its 95-percent share of the market for computer operating systems to thwart rivals.

It also ordered Microsoft to reveal secret computer code to rivals so they could develop competing products and to stop including its Media Player programme for free with its ubiquitous Windows operating system.

"What is at stake in this case is whether Microsoft can regulate the market by imposing its products and services on people or whether the market is allowed to function properly," Commission spokesman Jonathan Todd said.

Microsoft has fought back at every chance it gets, arguing that the Commission wants it to give away valuable trade secrets to competitors and that there is no demand for a version of Windows without Media Player.

The company also argues that the fine is unjustified and excessive, even though it is a drop in the bucket for Microsoft, which has annual revenues of about 57 billion dollars.

Although Microsoft reluctantly paid the fine and introduced versions of Windows without Media Player, its standoff with regulators has rumbled on since the Commission's ruling.

Brussels fined Microsoft a further 280 million euros in July 2006 after finding that it was not respecting its original ruling, and the company faces further penalties that could bring the total well past one billion euros.

However, the Commission is waiting to see whether the court backs its original ruling before pushing ahead with further action against Microsoft.