European antitrust regulators will fine Microsoft 497 million euros, or US$613 million, today when it rules that the company abused its monopoly in computer operating systems, people close to the company said on Monday.
The fine, which was set late last week after settlement talks with Microsoft broke down, was endorsed by national regulators from the 15 member nations of the EU on Monday.
Microsoft said the fine was too big.
"In view of the absence of a clear legal standard under EU law, a fine of this size isn't warranted," said Tom Brookes, the company's spokesman in Brussels.
Yesterday, the fine was to be discussed by senior aides to all 20 commissioners before being brought up at the European Commission's final meeting on the case this morning.
Microsoft would then be officially notified of the fine and sent a summary of the ruling by fax, shortly before Mario Monti, competition commissioner, announces the decision.
Under EU antitrust laws, the commission can set a fine of as much as 10 percent of a company's global sales -- in Microsoft's case more than US$35 billion. European antitrust regulators, however, have never fined a company 10 percent, and Brussels-based lawyers and officials had expected the fine against Microsoft to total between 100 million euros and 1 billion euros.
The biggest previous fine imposed by the commission was 462 million euros, or about US$406 million at the exchange rate at that time, against Roche of Switzerland in 2001 for its role in a number of cartels that fixed prices and market shares of vitamin products in the 1990s. (Seven other vitamin makers were fined lesser amounts in the case.)
Still, some people close to Microsoft had been speculating over the weekend that the commission would not issue any fine at all.
But Amelia Torres, a spokeswoman for Monti, said, "We have already told Microsoft many times that a negative ruling will incur a fine. A small company could claim it didn't know the rules, but not one the size of Microsoft."
Microsoft abused the monopoly position of its Windows operating system in two different ways, the commission is expected to rule today. By withholding vital information about Windows from rival makers of software for PC network server computers, the company gained an unfair advantage in the separate market for server software. It also competed unfairly by including its Media Player audio-video software as part of Windows. The commission is expected to announce remedies to restore competition in these markets, requiring Microsoft to sell two versions of Windows to PC makers in Europe, one of them with Media Player stripped out.
It would also have to share more secret Windows code to allow rival server software makers to compete with Microsoft server software more fairly, according to people close to the case. Computer servers drive networks of PCs.
These remedies would have more of an impact on Microsoft than a fine, because the company has more than US$50 billion in cash reserves and has already set some of that aside for covering legal costs.
After negotiations toward a settlement of the charges collapsed last week, Microsoft's chief lawyer, Brad Smith, said the company would appeal any ruling at the European Court of First Instance in Luxembourg.
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