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Microsoft to EC: define 'unreasonable'

Seeks numerical value of reason for royalties

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Microsoft just barely beat the clock today, responding to the European Commission's allegations it overcharges rivals for licensing its Work Group Server technology.

The EC had given Microsoft until this evening to answer the complaints, threatening fines as high as $4m a day.

Microsoft responded by waiving its right to a hearing on the matter and asked for a better idea what the Commission considers a reasonable price for the company to charge.

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

Microsoft was first ordered to make details of its server protocols available to rivals after being found guilty of anti-competitive behavior in 2004. That March, EU's Competition Commission lead by Neelie Kroes of the Netherlands alleged Microsoft's protocols lacked "significant innovation," making royalty charges Microsoft levies "unreasonable."

According to the Financial Times, a monitoring trustee hired by the Commission has recommended Microsoft charges royalty payments of zero to one per cent for licensing. Microsoft, on the other hand, wants to charge 5.95 per cent.

The Commission had originally given Microsoft until April 3 to respond, but extended the deadline at Microsoft's request.

The EC will now review Microsoft's response to determine if it will impose a daily penalty for failing to comply with the 2004 decision. ®

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