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Microsoft slapped with record €899m EC fine
Commission hopes to "close a dark chapter"…

By Reuters

Published: Wednesday 27 February 2008

The European Commission has fined Microsoft a record €899m for defying sanctions imposed on the software giant for antitrust violations, far exceeding the original penalty.

The Commission, executive arm of the European Union, has now fined Microsoft €1.68bn for its original violation and for failing to comply with sanctions, more than any other firm. It said no other company had ever ignored sanctions.

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Competition commissioner, Neelie Kroes, said in a statement: "Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision."

The company said the fines concerned "past issues" and it was now looking to the future.

The Commission said in a landmark 2004 ruling - upheld by an EU court last year - that Microsoft had withheld needed interoperability information from rival makers of "work group server" software.

The software, which operates printers and sign-ons for small office groups, must interoperate with desktop Windows machines. The Commission found Microsoft denied vital interoperability codes to rivals, whose market share then shrivelled, to be replaced by Microsoft's own product.

Microsoft was ordered to provide the information. It agreed to do so but imposed high royalties on grounds of innovation.

The Commission instead found the information lacked much innovation and was more like a lock to which Microsoft was withholding the combination. It decided the royalties were unreasonable.

Kroes said: "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision."

After fining Microsoft €497m in 2004, the Commission fined the company another €280.5m in July 2006 for failing to comply with the sanctions.

The latest decision picks up from where that fine left off, for the period from 21 June, 2006 until 21 October, 2007. After that, Microsoft agreed to reduced royalties and to provide needed information.

The Microsoft statement said: "As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are focusing on steps that will improve things for the future."

Last week, knowing a large fine was imminent for its failure to provide interoperability information, the company publicly promised to publish critical information so rival programs worked better with Windows.

The Commission took a wait-and-see attitude. It said Microsoft had several times made similar promises, only to have no real effect.

Microsoft still faces other potential action by the Commission.

In January, the EU executive started two new formal antitrust investigations against Microsoft - one relating to interoperability, and one relating to the tying of separate software products.