EU fines Microsoft for defiance
Wednesday July 12, 10:38 AM EDT
By David Lawsky and Sabina Zawadzki
BRUSSELS (Reuters) - European Union regulators fined Microsoft 280.5 million euros ($357.3 million) on Wednesday for defying a 2004 antitrust ruling, and warned the company to comply or face bigger fines from next month.
The tough new penalty is the first of its kind and comes on top of a record 497 million euro fine the Commission imposed in its landmark antitrust decision against Microsoft in March 2004.
"The EU Commission cannot allow such illegal conduct to continue indefinitely. No company is above the law. Each and every company, large or small, operating in the EU must abide by EU law," Competition Commissioner Neelie Kroes told reporters.
The Commission required Microsoft to provide technical information to rival server software makers after it found the company abused the dominance of its Windows operating system and squeezed out competitors.
"Microsoft did not even come close to providing adequate information," Kroes said.
The fine covers the period from December 16 to June 20 at 1.5 million euros daily. It fell short of a possible daily maximum of 2 million euros. Microsoft faces a further fine of up to 3 million euros a day if it still does not comply by July 31.
The move signals the Commission's determination to force the software giant to obey its order and a loss of patience after the company had two years to comply and used virtually every available legal and court procedure to spin out the process.
"It puts (Kroes) in a position of authority generally, which will make business across the board much more inclined to comply," said Chris Bright, a London competition lawyer, adding that energy companies could be the next focus.
The Commission's hardline approach contrasts with that of the United States, which in 2000 had similar findings against Microsoft but is still awaiting technical documents from the company as ordered by the U.S. Justice Department in 2002.
By May this year the process was so troubled that Microsoft and the court started over again in a process that took the cue from what a U.S. judge called "the European Commission's direction." Kroes noted this new U.S. approach on Wednesday.
PRECEDENT
Microsoft said it has made massive efforts to comply with the Commission's 2004 ruling and now has 300 people working to complete its package by an agreed deadline of July 18.
It called the fine unjustified, but said that will not slow its effort to comply. Microsoft, which has appealed against every ruling against it so far by the Commission, said on Wednesday it will appeal against this decision too.
"We do not believe that any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission's original decision," said Brad Smith, the company's top lawyer, in a conference call.
But he said that Microsoft remains totally committed to full compliance with the Commission's 2004 decision.
Kroes called the original order "crystal clear." It required interoperability information on reasonable and non-discriminatory terms.
The court is already reviewing an underlying challenge by Microsoft to the original Commission decision, and conducted a hearing in April on it.
After years of investigation, the Commission found in 2004 that Microsoft used the near-monopoly power of its Windows operating system to harm competitors making workgroup servers, which run printing and sign-on services in offices.
The Commission ordered Microsoft to give rivals the information needed so their servers could compete on a level playing field with Microsoft's own. Microsoft must help its rivals interconnect smoothly with Windows.
In the decision that was intended to set a precedent, it also found that Microsoft harmed competitors by illegally bundling its Windows Media Player with the operating system, leaving consumers with little incentive to buy rival software to watch films or listen to music.
The bundling issue poses concerns already voiced by Kroes about Microsoft's next operating system, Vista, which could package Internet search functions or software that creates fixed documents and thus threaten Google and Adobe.
"The launch next year (of Vista) will hopefully be in a shape in which all those 2004 decision items are taken into account," Kroes said.
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