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EU adopts draconian measures to guard against monopoly

Companies found guilty of anti-competitive practices are to face multibillion euro fines or more than 10 times the current tariffs for abusing their monopoly and taking part in cartels, under draconian guidelines adopted by the European commission on Wednesday.

Microsoft, the world's biggest software group, was fined a record 497 million euros (US$625 million) in March 2004 for abuse of dominance.

However, advisers to Neelie Kroes, the EU competition commissioner, said the company would have faced a fine of at least 2 billion euros (US$2.5 billion) under these new guidelines, with potential penalties up to 15 times higher.

Whistleblowers

Fines under the guidelines, which take effect next month, will be raised to up to 30 percent of annual turnover in the sector of business breaching competition law, and will be multiplied by the number of years the offense occurs.

The rules are designed to stiffen the deterrent effect and encourage whistleblowers.

They are also seen as a warning to Microsoft to address the commission's concerns about its Vista operating system, and are also directed at repeat offenders in the chemicals industry and other sectors.

Daily fines

Sources said: "If Microsoft does not address these concerns, we may have to act under the new guidelines before the [European] Court of Justice rules on its appeal over the earlier fine."

Microsoft already faces the possibility of a daily fine of 2 million euros, backdated to December 15 last year, for failing to comply with the order imposed by Mario Monti, the predecessor of Kroes.

A spokesman for Microsoft stressed that the penalties would only apply if the European commission released a new statement of objections, and they could not be applied to the current investigation.

Anti-trust rules

Kroes said clear signals were being sent to companies: "Don't break the anti-trust rules. If you do, stop it as quickly as possible, and ... don't do it again. If companies do not pay attention to these signals they will pay a very high price."

A fierce "entry fee" will now be levied on firms taking part in anti-competitive behavior.

The deterrent would be equal to 15 percent to 25 percent of the annual relevant sales and come on top of the infringement fine.

Repeat offenders, such as the chemicals groups Solvay, Bayer, Degussa and ICI, will also be fined 100 percent more if they have been previously found guilty, even by national regulators.
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