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EC gets Microsoft complaint

The Computer and Communications Industry Association files objections over promotional agreements the software giant has with ISPs.

The Computer and Communications Industry Association said it filed objections with the European Commission over cross-promotional agreements Microsoft has with Internet service providers.

But in what may be a sign of a growing unwillingness by some of its members to take on the software giant, the Software Publishers Association, one of Microsoft's biggest industry critics, remained silent on the issue.

The contracts came to light in January, when Microsoft announced it was eliminating provisions that forbid the ISPs from promoting competing browsers like Netscape Communications' Navigator more prominently than Microsoft's Internet Explorer.

Antitrust officials with the European Commission, the Justice Department, and in the Senate Judiciary all were scrutinizing the contracts at the time, but Microsoft said its decision to eliminate the provisions had nothing to do with those investigations.

Despite the changes, however, the CCIA remains opposed to the contracts, claiming that they "restrict the ISPs' ability to freely decide how to promote Microsoft's Web browser and any other competing browser." The trade group, which represents hardware and software companies in the communications industry, also said it was opposed to other provisions that prevented them from making changes to a directory of Web sites Microsoft includes with Internet Explorer, known as the Active Channel bar.

"CCIA believes that open and competitive markets are at risk when a company establishing such provisions occupies a dominant position and engages in a pattern of anticompetitive behavior," the group said in a statement.

Microsoft dismissed the comments as "silly," saying that they fail to recognize that there is nothing in the contracts that violates competition law. "You almost have to feel sorry for the CCIA for putting out such a goofy press release," said spokesman Mark Murray. "Our contracts specifically allow ISPs to promote and distribute every other browser, and they don't require any preferential treatment for Microsoft's browser."

The CCIA's objections are part of an arcane process mandated by Europe's Treaty of Rome, the sprawling set of laws governing antitrust law for member states. Under one provision, contracts that might be found to be anticompetitive must formally be cleared with the European Commission, or they can later be held unenforceable.

Microsoft's request for clearance appeared in the Official Journal of the European Communities in June and gave interested parties until yesterday to comment.

In order to get clearance, the commission must be convinced that competitive benefits outweigh any anticompetitive effects that may exist, said Jeff Kingston, an antitrust attorney at Brobeck Phleger & Harrison who represents companies in Europe. "Microsoft is now trying to persuade people that the way the contracts now sit ought to be good enough, but at this stage, I don't know that that will necessarily carry the day," added Kingston, who has taken Microsoft on before. "The commission may require further changes and modifications."

In what may be a significant sign, the Software Publishers Association, the other trade group that has become a major critic of Microsoft, did not file comments concerning the contracts. According to two sources who asked not to be named, SPA members were sharply divided over approving a draft response, adding that the CCIA's filing is almost identical to the SPA's draft.

SPA president Ken Wasch declined to say whether his group handed off its draft statement to the CCIA, but said generally that the decision over whether to issue a comment generated "intense debate" within the SPA's government affairs committee and a European board of advisors. Microsoft lobbyist Jack Krumholtz sits on the government affairs committee.

Representatives from the CCIA--which does not have to go through the same process in approving public positions--were not immediately available for comment.