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Microsoft to lower prices to settle trade dispute

The Fair Trade Commission yesterday accepted a settlement from Microsoft Taiwan Corp to settle an unfair trade complaint whereby the company agreed to cut its software prices up to 54 percent.

The May 2002 suit alleged that Microsoft products were more expensive locally than in other countries.

"We reached a settlement today to ensure fair trade, to protect consumer interests and to help promote development in the local IT industry," Commission Vice Chairman Chen Chi-yuan (陳紀元), said yesterday at a press conference.

Microsoft has consistently refused to admit its prices were exorbitant.

"We don't have any control over the final retail price consumers pay," Pamela Chang (張蓓蕾), a public relations official at Microsoft, said yesterday.

It remains to be seen whether Microsoft's distributors will pass the price cuts on to consumers.

In the agreement, the company promised to cut the price of 13 software products by between 13.2 percent and 54.5 percent, starting March 15. The cost of one of the company's most popular products, Office XP Professional, would in theory be cut from NT$21,000 to NT$18,000.

In addition, Microsoft agreed to offer portions of its source code for the Windows operating system to the government and private companies so that they can develop their own products to work with Windows. However, the decision who to share the code with rests with Microsoft.

The company also said it would sell some products individually instead of bundling them together. Consumers have complained that the purchase of Word entailed buying an Office package that also includes Excel, Outlook and PowerPoint.

Reacting to the settlement, Consumers' Foundation (消基會) secretary-general Cheng Jen-hung (程仁宏) complained the verdict lacks teeth.

"The decision contains no directives to Microsoft," nor does it seek compensation for consumers who have been paying through the nose for their software, Cheng said. "Consumers' rights have been sacrificed by the commission," he said.

The commission conceded too much to Microsoft, particularly in allowing the company to maintain a fixed pricing policy, and is now locked into a binding agreement for five years, allowing Microsoft to continue to dominate the local market, Cheng said.

His biggest gripe against the decision was its lack of transparency.

"We don't know what kind of deal the two sides struck behind closed doors," he said.

Cheng demanded the commission make public details of the decision-making process.

The Chinese-language media has recently speculated that Microsoft threatened to withdraw a proposed research center from the country, forcing the commission to treat the company with kid gloves.

Under Taiwan's fair trade laws the head of a company can the head of a company can be jailed for up to three years and fined up to NT$100 million (US$2.89 million) if he is found guilty of abusing the company's market dominance.

The Consumers' Foundation is prepared to sue Microsoft for compensation if the company does not come up with a satisfactory offer first, Cheng said.

Last month, Microsoft agreed to pay US$1.1 billion in vouchers to consumers in California after losing a host of class-action law-suits in that state that alleged the company used its monopoly to overcharge for software.
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