S.Korea antitrust body rejects Microsoft objection

SEOUL, May 23 (Reuters) South Korea's antitrust watchdog said on Tuesday it had rejected an objection lodged by Microsoft Corp. over a ruling that the company should unbundle its media player and messaging service from Windows software.

The world's biggest software company was ordered in December by South Korea's Fair Trade Commission (FTC) to make the separation or allow embedding of rival products on its system. The FTC also fined Microsoft 32.5 billion won (.28 million).

Microsoft filed a formal objection with the FTC in March, seeking to anul all the decisions and the fine, the FTC said.

The U.S. company also separately filed an appeal with the Seoul High Court to review the case.

Microsoft said it would continue with the appeals process.

''This is just one piece of the legal process,'' Oliver Roll, general manager for Microsoft's marketing in Asia Pacific, said by telephone.

''This issue is about innovation on behalf of the Korean consumers.'' Microsoft has said its bundled version benefited consumers and the local technology industry, and did not block competition because South Koreans could already download and use competitors' software.

''The FTC decided to essentially reject Microsoft's objection,'' the watchdog said in a statement.

The ruling, which resembles a 2004 European Commission decision, held Microsoft in breach of antitrust laws by selling a version of Windows that incorporated its media player and instant messaging service, impending competition.

''We respect the Korea Fair Trade Commission's decision,'' Microsoft said separately in a statement. ''However, Microsoft firmly believes it has complied with Korean competition laws, and has conducted business for the benefit of the consumers in Korea.'' ''Microsoft will continue to defend its position in the case through the appeal process in the Seoul High Court.'' Microsoft also had been ordered to separate its Windows media service from its server operating system.

The FTC said, however, it had accepted part of Microsoft's request to cancel an order that bans Microsoft from bundling its media player and messenger service with other dominant products such as Microsoft Office.

''If such bundling takes place, the FTC can investigate and issue orders for correction,'' it said.

The Seoul court is separately reviewing Microsoft's appeal, the FTC added.

South Korea was among the top 10 markets for Microsoft globally, the company has previously said, although it did not give details.

The million fine is the largest imposed on a foreign firm by the FTC. However, analysts said the ruling would have limited ramifications beyond the country.

REUTERS CS PM1644