EU slaps €280.5m fine on Microsoft

12 Jul 2006

The European Commission this morning imposed a €280.5m penalty payment on Microsoft for what it called “continued non-compliance” with its obligations under an antitrust decision taken in March 2004.

That original decision found that Microsoft had violated EU antitrust laws (Article 82) by exploiting its dominant position to compete unfairly against other companies. The decision also required the software firm to disclose complete and accurate interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers.

According to the commission, as of 20 June, Microsoft had still not supplied this interoperability information as required by the March 2004 Decision. Microsoft’s obligations in this regard are clearly outlined, the EC added, a point Microsoft has disputed.

Today’s fine amounts to €1.5m per day, backdated to 16 December of last year. However, there is provision in this morning’s decision to double the daily penalty to €3m if Microsoft continues to fail to comply, the EC said.

In a statement, European Competition Commissioner Neelie Kroes said: “I regret that, more than two years after the decision and despite an Order from the President of the Court of First Instance that the Microsoft appeal to the Court does not suspend Microsoft’s obligation to comply, Microsoft has still not put an end to its illegal conduct. I have no alternative but to levy penalty payments for this continued non-compliance. No company is above the law.”

Reacting to the decision, Microsoft general counsel Brad Smith said: “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. We will ask the European courts to determine whether our compliance efforts have been sufficient and whether the commission’s unprecedented fine is justified.”

Despite these fines, Smith said Microsoft “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,” he added.

By Gordon Smith