Senate Maj. Leader Frist condemns EU "intolerable" Microsoft decision

[Declan McCullagh <declan () well com>]

http://frwebgate4.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=68287617823+1+0+0&WAISaction=retrieve

[Congressional Record: March 24, 2004 (Senate)]
[Page S3092]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr24mr04-172]




              EUROPEAN UNION TRADE DECISION RE: MICROSOFT

  Mr. FRIST. Mr. President, for some time now, the U.S. Congress has
expressed its frustration over the European Union's intransigence on
international trade issues that are vitally important to the U.S.
economy. From overreaching attempts to regulate e-commerce, to trade
barriers against American beef and other agricultural products, the EU
has relentlessly pursued protectionist policies that disproportionately
harm American businesses and workers. I now fear that the United States
and EU are heading toward a new trade war--and that the Commission's
ruling against Microsoft is the first shot.
  For the most part, economic growth across the European Union has been
meager during this decade. No doubt this is a by-product of the global
economic slow down that began in the last year of the Clinton
Presidency. But as the U.S. economy achieves record-setting levels of
economic growth, Europe remains stagnant. Why? Because European
economies are buried by public sector debt; European economies are
drained of their vitality by excessive taxation; and European economies
are strangled by excessive regulation from bureaucrats sitting in
Brussels. Now, as if destroying Europe's economy were not enough, the
European Commission has taken aim at Microsoft, a company whose
products and technology have been engines of global economic growth.
  The Commission's ruling imposes the largest fine ever levied by the
Commission against a company--over $610 million. This fine was imposed
despite the Commission's tacit admission that European law in this area
is unclear, and even though Microsoft is already subject to legal
obligations, under the U.S. settlement, for essentially the same
conduct that was at issue in the EU proceedings. As a result, money
that rightfully belongs to Microsoft shareholders will instead be
filling the coffers administered by Commission bureaucrats.
  The Commission's ruling also requires Microsoft to sell a version of
Windows without multimedia functionality--i.e., one that cannot play
audio or video. Thus, the ruling forces Microsoft to spend its energies
not on developing new, innovative products, but on designing a degraded
version of Windows--in short, a product that no one wants or needs.
This preposterous demand, by a foreign government, will hurt one of
America's most successful companies and harm the hundreds of American
IT companies that rely on the multimedia functionality in Windows to
offer their own innovative products and services--companies that are
responsible for thousands of high-paying American jobs. As the New York
Times noted in an editorial last Saturday (March 20), the Commission's
demands ``would threaten Microsoft's business model and, more
important, harm consumers. The very definition of a computer operating
system would essentially be frozen where it is today.''
  In imposing this anti-consumer, anti-innovation penalty, the
Commission has blatantly undercut the settlement that was so carefully
and painstakingly crafted with Microsoft by the U.S. Department of
Justice and several State antitrust authorities. There can be no
question that the U.S. Government was entitled to take the lead in this
matter--Microsoft is a U.S. company, many if not all of the complaining
companies in the EU case are American, and all of the relevant design
decisions took place here. Had the Commission been cognizant of
America's legitimate interests in this matter, it would have acted in a
manner that complemented the U.S. settlement. Needless to say, the
Commission instead selected a path that places its resolution of this
case in direct conflict with ours--and threatens the vitality of
America's IT industry in the process.
  The Commission's complete indifference to the negative impact of its
ruling on American jobs, American consumers, and the U.S. economy--and
its total disregard of the Department of Justice--are intolerable.
  The European Commission has, of course, on many occasions paid lip
service to the importance of international coordination in the area of
competition, and on the need for other countries to be sensitive to
extraterritorial effects of their antitrust rulings. But actions speak
louder than words, and with the Microsoft ruling the Commission appears
intent on saying that it considers the Department of Justice, the U.S.
courts, and principles of open and fair international trade largely
irrelevant.
  It is critical that the Departments of State and Justice stand up not
only for an important American company, but also for U.S. industry,
U.S. shareholders, and American workers. If the U.S. Government does
not make a clear and strong statement objecting to the EU actions, we
will lose influence and credibility for years to come to the detriment
of the U.S. economy and U.S. consumers.

                          ____________________





http://frwebgate4.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=68287617823+0+0+0&WAISaction=retrieve


[Congressional Record: March 23, 2004 (Senate)]
[Page S2992-S2993]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr23mr04-144]




                 THE EUROPEAN COMMISSION AND MICROSOFT

  Mr. ALLEN. Mr. President, I rise to address the European Commission's
antitrust action against Microsoft. It is my understanding that
antitrust authorities for the European Union member nations have given
European Competition Commissioner Mario Monti their unanimous backing
for a formal commission finding that Microsoft abused its market share
of its Windows operating system for personal computers to leverage its
way into related markets for networking and multimedia software. It is
expected that the European Commission will hand down a formal decision
finding that Microsoft is in violation of European Union antitrust
laws.
  By imposing harsh, unprecedented penalties upon Microsoft, the
Commission has extended its view of competition and regulation beyond
Europe and onto the United States--to the detriment of U.S. laws,
industry and consumers.
  For many years, the European Union and its member states have
criticized the United States for adopting laws and regulations that, in
the view of European policymakers, have had an extraterritorial reach.
The European Commission in particular has consistently urged the United
States to ensure that its legal determinations do not intrude into
European affairs. We now have a clear example of the European Union not
practicing what they preach.
  If the Commission rules that Microsoft is in violation of European
Union antitrust laws, it will undercut the settlement that was so
carefully and painstakingly crafted with Microsoft by the U.S.
Department of Justice and several state antitrust authorities. There
can be no question that the U.S. Government was entitled to take the
lead in this matter--Microsoft is a U.S. company, many if not all of
the complaining companies in the EU case are American, and all of the
relevant design decisions took place here. I would hope that if the
Commission were cognizant of America's legitimate interests in this
matter, it would act in a manner that complemented the U.S. settlement.
I fear the Commission has selected a path that places its resolution of
this case in direct conflict with ours.
  This is not the only example of the Commission's overreaching in this
case. In recent negotiations with Microsoft, the European Commission
demanded that Microsoft agree to ensure that computer manufacturers who
sell pre-installed versions of Windows also install three competing
media players--an obligation that the Commission insisted on imposing
not just within the EU, but globally. In spite of its objections to
these requirements, Microsoft agreed to the Commission's approach in
order to reach a settlement. I understand the Commission proposes to
impose a fine of over $610 million on Microsoft--higher than any fine
in the Commission's history. It has been suggested that the amount of
this fine was based not only on Microsoft's conduct in the EU, but in
the United States and elsewhere as well. One can only conclude that the
Commission was not satisfied with how U.S. antitrust authorities and
courts resolved the case against Microsoft, and therefore decided to
act as a kind of supra-national competition authority by fining
Microsoft for its conduct worldwide.
  The Commission's proposed ruling, as well as its negotiation tactics,
is unprecedented in its scope. By proposing

[[Page S2993]]

to fine Microsoft for purported anticompetitive conduct and injuries in
the United States, the European Commission is directly challenging the
adequacy of the United States' own antitrust laws, including the
settlement that Microsoft and U.S. authorities reached in the U.S.
proceedings. In fact, the obligations proposed to be imposed on
Microsoft by the Commission are precisely the type that the U.S.
District Court and the U.S. Department of Justice rejected as
undermining consumer welfare.
  It is incumbent on the Departments of State and Justice to stand up
not only for an important American company but more importantly for
legitimate U.S. jurisdiction over alleged anticompetitive behavior in
the United States. The U.S. and the EU are signatories to a 1991 comity
agreement on antitrust issues which requires that one government defer
to the other if the principal issues being investigated involve
companies of one of the parties. Here, the EU is investigating a U.S.
company based on complaints from other U.S. companies. If the U.S.
Government does not make a clear and strong statement objecting to the
EU's extraterritorial approach, we will lose influence and credibility
for years to come to the detriment of all U.S. industry, as well as to
U.S. consumers.

                          ____________________




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