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MSFT faces UK cable veto?
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July 4, 2000: 7:47 a.m. ET
Report: Regulator set to prevent Microsoft buying $3B Telewest stake
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LONDON (CNNfn) - Microsoft Corp. appeared set for another dispute with competition regulators Tuesday, with the European Union preparing to block its proposed £2 billion ($3 billion) investment in a U.K. cable broadcaster, according to a published report.
Microsoft had planned to buy 29.7 percent of Telewest Communications PLC, Britain's second-largest cable operator, but in March the European Commission said it would carry out an extended investigation into the deal. The Commission, the Brussels-based executive arm of the EU, is due to report by Aug. 4.
The Wall Street Journal said Tuesday that Commission officials were unhappy with the deal, fearing it might give the Seattle-based software firm a dominant position in the market for the digital set-top technology used when customers access the Internet via high-speed cable.
The newspaper cited a person familiar with the Commission's deliberations, who said that Microsoft is not making enough concessions to satisfy the competition watchdog.
The Telewest stake is owned by MediaOne, which was swallowed up by U.S. telecom service provider AT&T Corp (T: Research, Estimates). 
A source close to the Commission told CNNfn the companies had been sent the draft decision, and were aware of the regulator's concerns.
Microsoft has made several investments in European cable companies, owning 8 percent of Netherlands-based United Pan-Europe Communications NV. UPC recently announced a complicated asset swap that would see it gain a 25 percent holding in Telewest. What this would mean for the proposed Microsoft stake in Telewest was not clear, the Journal said.
A spokesman for EU Competition Commissioner Mario Monti declined to comment on the report to CNNfn.com Tuesday, although he indicated a decision on the deal could be made "soon".
A Microsoft spokesman told CNNfn.com: "Microsoft believes the deal will be approved," but would not give further details on the company's discussions with the Commission. A Telewest official said the EU investigation was "a matter for shareholders," and repeated its statement that it was "looking forward" to having Microsoft as a shareholder.
The Commission is already investigating whether Microsoft exerts an undue influence over the business software industry. The firm is embroiled in long-running litigation in the United States over whether it constitutes an abusive monopoly.
Microsoft stock closed unchanged at $80 on Monday, a half-day for U.S. markets. In midday London trading Tuesday Telewest (TWT) shares were little changed at 227 pence. 
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