EU to slap €500m antitrust fine on Microsoft

23 Mar 2004

On the eve of the European Commission’s impending judgment in Microsoft’s antitrust case, it has emerged that the Commission has decided to slap a fine approaching €500m on Microsoft, the world’s largest software maker.

Last week, Microsoft CEO Steve Ballmer flew into Brussels for a last ditch meeting with EU competition commissioner Mario Monti to avert a draft decision by 15 EU states to punish the software giant for alleged anti-competitive practices.

The draft decision requires Microsoft to share proprietary information with rival server makers and to provide computer manufacturers with a second version of Windows stripped of built-in audiovisual software. Microsoft also faces the prospect of a fine expected to run into hundreds of millions of euros as part of the EU’s sanctions against the company. The meeting between Ballmer and Monti failed and Monti said that the EU was likely to press ahead with the draft decision backed by 15 member states.

According to the latest reports a fine approaching €500m is likely to be slammed on Microsoft tomorrow once a judgement declaring Microsoft abused its monopoly position is revealed. The European Commission could have fined Microsoft up to 10pc of its annual revenue, or more than US$3bn. Despite this, even the proposed fine, which equals US$613m, would be a record penalty for EU regulators.

The fine is reported to have been proposed by Monti and was backed by EU member states on Monday.

However, Microsoft has slammed the proposed fine declaring it “unwarranted” and said that it would definitely appeal the EU’s decision.

Speaking last week after talks between himself and Monti broke down, Steve Ballmer said: “I believe negotiations between Microsoft and the European Commission broke down because we were unable to agree on a set of consumer driven principles on issues that might arise in the future. I think we did a good job of putting forward proposals that the Commission thought were valuable to resolve the current issues in the case but these forward looking issues proved intractable.

“Microsoft worked very hard to try to resolve these issues without litigation. Because of the tremendous value Microsoft attaches with our relationships with governments all across Europe, we made every possible effort to settle this case and I hope that perhaps that we can still settle this case at a later stage”, Ballmer said last week.

By John Kennedy