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Wed, Jul 12, 2006 - Page 10 News List

EU poised to slap fine on Microsoft

HUGE PUNISHMENT The US software giant's decision to ignore an earlier antitrust ruling looks like it will cost it dearly, with the new fines likely to be backdated to last year


European regulators are poised to slap huge new fines on Microsoft today as Brussels loses its patience with the US software maker for defying a 2004 EU antitrust ruling.

Frustrated that Microsoft has flaunted the ruling for more than two years, EU Competition Commissioner Neelie Kroes warned last week that new daily fines were all but inevitable.

"I can't imagine another way," Kroes said when quizzed about the issue.

Although the European Commission and regulators in individual member states have agreed on the principle of fresh fines, they were due to take a decision on the sum on Monday.


The fines, which could go as high as 2 million euros (US$2.55 million) a day, will be backdated to December 15, and could therefore reach as much as 400 million euros.

However, several sources close to the matter said that the commission could raise the daily fines to as high as 2.5 million euros or 3 million euros in the future.

Microsoft has already paid dearly for its standoff with the European Commission, which slapped a record fine of 497 million euros on the company in March 2004.

After a five-year investigation, the commission took its biggest competition decision ever in ruling that Microsoft had broken EU law by using a quasi-monopoly in personal computer operating systems to thwart rivals.

Divulge information

In addition to slapping the fine on Microsoft, the EU ordered the company to sell a version of its Windows operating system without its Media Player software and to divulge information about Windows needed by makers of rival products.

Although Microsoft has paid the fine, it has fought tooth-and-nail over the confidential information it is supposed to reveal to industry competitors.

Irritated that Microsoft has not complied with the ruling, Brussels has threatened to slap daily fines on Microsoft, backdated to December 15 -- its deadline to respect the ruling.

But Microsoft says that it is releasing reams of key computer code needed by programmers of rival products and claims therefore that any further fines go too far.

"We have 300 staffers working full time on preparing the necessary documentation" for release, a spokesman for the group said, adding that a "totally revised" package was expected to be ready on July 18.

However, Kroes' spokesman Jonathan Todd said that "there is nothing unjust" in the commission's decision to slap new fines "because they have had two years" to comply with the 2004 decision.

"The fact that they are providing us with additional information can help them to avoid future problems and we hope that this new documentation will be sufficient," he said, adding that "that will not be enough to avoid a fine" today.

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