March 1, 2007 / 10:58 AM / 13 years ago

EU warns Microsoft of possible further fines

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.

Microsoft Chairman Bill Gates is silhouetted as he walks on stage to deliver a speech to the Canadian Chamber of Commerce in Ottawa February 20, 2007. REUTERS/Chris Wattie

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.


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”.

It said a study showed its prices were 30 percent below the market rate. The assertion in a 1,500-page submission was rejected by the Commission as unfounded.

No Microsoft rival has bought the interoperability data because it is too expensive, the Commission’s Todd said.

He said Microsoft’s market share of small-business server software has grown to 75 percent while it defies the Commission.

Todd said additional daily fines for overpricing the protocols could be backdated to December 16, 2005. Microsoft could face additional fines of hundreds of millions of euros.

They would be in addition to the 280.5 million euros the company was fined last July for failing to give clear instructions on how to use the protocols, and the 2004 fine.

The Commission said it is still reviewing the latest versions of the instructions.

Microsoft has appealed against the original 2004 decision to a European court which is due to decide on the case this year.

A Commission spokeswoman was asked by reporters if the Commission would still work with Microsoft in innovation given its failure to respect EU rules. “I think different aspects you mentioned are not affected by today’s decision,” she replied.

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