EC tickets Microsoft with £200m fine

The European Commission has today fined Microsoft a total of EUR€280.5mn euros for its failure to comply with the March 2004 Decision requiring it to provide complete and accurate interface specifications to allow other companies to make their products interoperable with Microsoft PCs and servers.

The fine corresponds to EUR€1.5mn per day and covers the period from 16 December 2005 to 20 June 2006 and marks the first time in the 49-year history of the EU that a company has been fined for failure to comply with an anti-trust decision.

Announcing the fine, Neelie Kroes, European Commissioner for Competition Policy said that no company is above the law and warned Microsoft that if it has not complied by 31 July, the fine will be raised to EUR€3mn per day.

‘It is now more than two years since the Commission’s March 2004 Decision that found Microsoft to be in violation of the EU’s anti-trust rules by abusing its dominant market position,’ Kroes said.

‘It is more than 18 months since an Order from the President of the Court of First Instance required Microsoft to comply with the Decision without delay. The European Commission cannot allow such illegal conduct to continue indefinitely.’

Kroes said that the Commission has taken a ‘cautious approach’ to assessing whether the company has complied, examining both numerous reports by the Microsoft-approved Monitoring Trustee Microsoft’s own documentation.

‘Having carefully weighed all of the evidence, only one conclusion was possible,’ Kroes said. ‘From 16 December last year to 20 June of this year: Microsoft did not even come close to providing complete and accurate specifications. Microsoft therefore remained in breach of the Commission Decision and the Commission had no option but to impose a penalty payment on Microsoft.’

Microsoft general counsel Brad Smith said it would challenge the fine in the courts.

‘We have great respect for the Commission and this process, but we do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission’s original decision and our good-faith efforts over the past two years,’ Smith said.

The company is also appealing the original March 2004 Decision, but says that remains totally committed to full compliance with the Commission’s 2004 decision.

‘We will continue to do whatever the Commission asks to comply with its decision as these issues are considered by the courts. The record will show that Microsoft has acted in good faith to comply with the Commission’s decision. We delivered thousands of pages of technical documents from December 2004 onward. When it became clear there were disagreements over the technical documentation requirements, we pressed for greater clarity, we delivered revisions promptly, we offered unlimited technical assistance, and we even made our source code available to competitors in an effort to resolve the impasse,’ the company said in a statement, stressing that it believes that the real issue is not compliance but clarity.

Microsoft condemned the size of the fine which is said is larger than the fines the Commission has imposed for even the most severe competition law infringements, such as price-fixing cartels.

‘When you consider Microsoft’s massive efforts to comply with this ruling, and the fact that more than a dozen companies are already using similar documentation provided in the US to ship actual products, we do not believe this fine is justified,’ it said.