EU warns Microsoft of possible further fines

By David Lawsky and Sabina Zawadzki

BRUSSELS (Reuters) - The European Commission turned up the pressure on Microsoft (MSFT.O) on Thursday, warning the U.S. software giant of new fines and accusing it of serial defiance of an antitrust ruling made nearly three years ago.

The Commission said Microsoft has set unreasonably high prices that discourages would-be competitors from making server software, while Microsoft continues to grab market share.

"In the 50 years of European antitrust policy, it's the first time we've been confronted with a company that has failed to comply with an antitrust decision," the Commission's competition spokesman Jonathan Todd said.

Todd said the continuing dispute, almost three years after the Commission found Microsoft abused the dominant market position of its ubiquitous Windows operating system, was solely due to the company's behavior.

"You have to look at their attitude faced with other antitrust authorities in other jurisdictions. This is a company that apparently does not like to have to conform with antitrust decisions," Todd told a news conference.

But Microsoft General Counsel Brad Smith said the fines and troubles it faced in Europe were unique.

"We have been complying with antitrust rulings on five continents for 15 years and yet we are not experiencing these kinds of issues or this type of process anywhere else," he told reporters in a conference call.

Microsoft has four weeks to reply to the charges and is entitled to a hearing.

PATENT PROTECTED

In March 2004, the Commission imposed a record 497 million euro ($657 million) fine on Microsoft and ordered it to change its business practices, ruling the company failed to give information to other makers of small-business servers needed to compete with Microsoft's own products.

Microsoft has said it would charge for interoperability information because it was based on its own innovative work and protected by patents.

But the Commission said on Thursday competitors give away such software whether or not it is patented.

"The Commission's current view is that there is no significant innovation in these protocols," European Competition Commissioner Neelie Kroes said in a statement.

"I am therefore again obliged to take formal measures to ensure that Microsoft complies with its obligations," she said,

Microsoft said the Commission was trying "to regulate the pricing of our intellectual property on a global basis and not just within the EU".