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Microsoft Meets Deadline on Response to EU Charges

Microsoft has responded to European Union allegations that it is overcharging rivals for information that would make their products work better with Windows. The software maker also repeated its request for more guidance on what regulators consider to be an acceptable price.

To level the software industry's playing field, EU officials want Microsoft's competitors to have access at a "reasonable cost" to material that would help their programs interoperate with Windows-based servers. Regulators have called the current prices excessive and Microsoft's information insufficient.

The EU had given Microsoft until Monday night to come through with a response on the fees it seeks from competitors to share computer information, and threatened daily fines that could go as high as $4 million a day. It said it will consider the company's reply and decide whether to impose a daily penalty.

Microsoft declined to provide details about the company's response.

Microsoft previously said the prices it charges are fair and that the EU has failed to provide clear guidance.

Also Monday, Microsoft declined the opportunity to have a hearing with the Commission on the EU's Statement of Objections.

"We need greater clarity on what prices the (European) Commission wants us to charge, and we believe that is more likely to come from a constructive conversation than from a formal hearing," said Brad Smith, Microsoft's general counsel.

Microsoft's license program sets a maximum 5.95% royalty rate for products that use its server protocols and the company has said it believes the prices reflect the code's value. It claims the Commission wants it to license the technology to competitors for free.

No Significant Innovation

On March 1, the EU's executive arm said there was "no significant innovation" in the requested information Microsoft had to provide rivals - and therefore Microsoft did not have the right to charge high fees for licenses.

Microsoft has complained that the treatment it receives from the 27-nation EU is unmatched around the world and hurt Europe's efforts to become a thriving high-tech economy.

In a landmark 2004 ruling, EU regulators found the company broke competition laws and abused its dominant market position.

Besides a record $674 million fine it imposed at the time of the ruling, the EU levied a $380 million fine last summer, saying Microsoft did not supply - as demanded - complete interoperability documentation.

In the meantime, Microsoft has reached licensing agreements with several of the companies that originally took issue with the software maker's practices and pricing, including Sun Microsystems and Novell.

Microsoft has appealed the 2004 ruling and a court decision is expected by September.

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