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Microsoft Faces Antitrust Ruling After Negotiations with EU Fail

By Paul Meller and John Markoff

The New York Times -- BRUSSELS

Settlement talks between Microsoft and European regulators collapsed on Thursday, exposing the company to an antitrust ruling that could limit it in one of the largest and richest markets in the world.

The end of the talks followed two days of meetings between Microsoft’s chief executive, Steven A. Ballmer, and the European Union’s antitrust chief, Mario Monti. A formal ruling is not expected until Wednesday, but Monti unexpectedly appeared at the noon briefing on Thursday at the European Commission to announce: “A settlement on the Microsoft case has not been possible.”

The 5-year-old European case accusing Microsoft of abusing its global dominance in operating software -- in particular, its bundling of its Media Player into Windows -- has been the last major legal challenge dogging the company since the landmark settlement of the Justice Department’s antitrust lawsuit in 2001.

The case also contended that Microsoft unfairly withheld technical information from competitors, making it difficult for them to create software for business servers that works well with Windows.

A ruling against the company, if held up in court, could mean a fine of as much as $3 billion against Microsoft. More importantly, it could force the company to make fundamental changes in the way it sells software in the European Union, the world’s largest trading bloc. And the ruling could become a precedent for future antitrust litigation against the company.

Microsoft said it would appeal such a ruling in the European courts and file a motion to halt the imposition of sanctions while an appeal proceeds. The appeal process itself could take four to five years, unless the two sides choose to settle later. Both regulators and the company said on Thursday that they had made significant strides toward a settlement before negotiations broke down.