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EU hits Microsoft with record antitrust fine

Latest update : 2008-02-28

US software giant Microsoft has been hit with a record 899 million euro fine by the European Commission, for defying a 2004 order from Brussels to lower prices for software competition. (Report: C. Norris-Trent)

BRUSSELS, Feb 27 (Reuters) - Microsoft was fined a
record 899 million euros ($1.35 billion) by the European
Commission on Wednesday for using high prices to discourage
software competition in the latest sanction in their
long-running battle.

The executive arm of the European Union said the U.S.
software group defied a 2004 order from Brussels to provide the
information on reasonable terms.

Microsoft has now been fined a total of 1.68 billion euros
by the EU for abusing its 95 percent dominance of PC operating
systems through Windows.

Its latest fine far exceeded the original and was the
biggest ever imposed on a company.

"Microsoft was the first company in 50 years of EU
competition policy that the Commission has had to fine for
failure to comply with an antitrust decision," Competition
Commissioner Neelie Kroes said in a statement.

For years after the decision Microsoft said it was making
every effort to comply with the Commission's orders.

"Talk is cheap, flouting the rules is expensive," Kroes
said. "We don't want talk and promises. We want compliance."

Microsoft said in a statement the fines concerned "past
issues" and it was now looking to the future.

The Commission said in a landmark 2004 ruling, upheld by an
EU court last year, that Microsoft had withheld needed
interoperability information for "work group server" software.


Rival makers of work group servers, which operate printers
and sign-ons for small office groups, saw their markets shrivel
because Microsoft stopped providing information they needed to
hook up to Windows office machines.

Even after the 2004 decision and a 497-million euro fine
Microsoft dragged its feet, giving incomplete documentation and
charging high royalties, the Commission said.

"I hope that today's decision closes a dark chapter in
Microsoft's record of non-compliance with the Commission's March
2004 decision," Kroes said.

The latest decision picks up from where a 280.5 million euro
fine for non-compliance left off, covering the period from June
21, 2006 until Oct. 21, 2007. After losing a major court
decision in September 2007, Microsoft capitulated.

Last week it promised to publish critical information so
rival programmes worked better with Windows.

That came as the company was facing this week's fine and
perhaps even more important, two new formal Commission
investigations opened in January.

"As we demonstrated last week with our new interoperability
principles and specific actions to increase the openness of our
products, we are focusing on steps that will improve things for
the future," Microsoft said on Wednesday.

The new Commission investigations relate to the issues of
the 2004 case but with different products.

The Commission said in 2004 that Microsoft tied its Windows
Media Player to Windows. Opera, maker of a Web browser, said
Microsoft has done the same with Internet Explorer.

The new interoperability question concerns Microsoft Office
and the difficulty for documents from rival systems to
interoperate with Word and other Office products.

Kroes took a wait-and-see attitude about Microsoft's
announcement of last week, noting it had promised change on four
other occasions without results.

"A press release, such as that issued by Microsoft last week
on interoperability principles, does not necessarily equal a
change in a business practice," she said.

Date created : 2008-02-27