Smash hit

The company is asking for the €497 million penalty, which it has already paid, to be handed back.

M Bellis said that the EC's "theory" that the combination of Windows and Media Player had limited consumer choice was "flawed at every step."

He claimed that users had benefited from Microsoft’s improved Windows and competition in the audiovisual software industry was thriving, contrary to the commission’s predictions that rival media player providers would become extinct.

M Bellis said the EC had envisaged a scenario where computer makers would take the stripped-down version of Windows, known as XPN, and sell it with rival audiovisual software such as RealNetworks’ RealPlayer or Apple Computer’s Quicktime.

"As of today no PC maker has shipped a version of XPN ... not a single one," he claimed, noting that manufacturers account for 90 per cent of Windows sales.

Retail outlets ordered 1,787 copies of XPN among 35 million copies of Windows, meaning it accounted for 0.005 per cent of sales, he added.

"The Commission made fundamental errors of fact and reasoning" in finding that Microsoft broke the law because of its "failure to offer a product that nobody wants", he said.

Brad Smith. a lawyer for Microsoft said shortly before today's trial opened that the company welcomed "the opportunity to present our evidence."

He added: "The impact of this case goes far beyond Microsoft. The ability to innovate is important to the success of any company and the economic success of any country."

However the case, which dates back as far as 1998, is also being seen as a crucial test of the resolve of Neelie Kroes, the EC's Competition Commissioner.

Shortly after taking office as Europe's top competition watchdog in November 2004, after the key Microsoft ruling, Ms Kroes vowed she would not be the "pussy cat" of big business. Although the commissioner has made opening energy and financial services to greater competition a priority, the Microsoft dossier has never strayed far from her desk.

Separately from today's trial, she recently threatened Microsoft with fines of up to $2 million a day if it was found that the company is not doing enough to meet the demands laid out in the landmark 2004 ruling.

Last month she wrote to Microsoft chief executive Steve Ballmer to say that the company's latest version of Windows, Vista, risked raising fresh competition problems, in a warning that could herald a fresh confrontation.

Meanwhile, despite recent comments from Microsoft, which has insisted it is working to overhaul its relationship with Brussels, today's case will roll on long after this week's hearings. The judges will hand down their decision late this year. Microsoft would then have leave to appeal.

Michael Grenfell, a competition partner at Norton Rose, the law firm, said today's dispute represented "a real 'clash of the titans'" between two big, well-funded organisations who can afford to fight in court and cannot afford to lose.

He added: "For Microsoft, the ability to leverage off its success with Windows to expand into other markets, including the fast-growing markets for downloading media services, is a key part of their future business prospects."

Was the EC right to fine Microsoft? Have your say here.

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