February 27, 2008

Microsoft Faces Record Fines from EU

Microsoft Corp. was fined by The European Union for a record $1.3 billion Wednesday accusing the Redmond, Washington firm of imposing "unreasonable prices" on rival software developers who wanted to make their products compatible with Windows operating systems.

Microsoft has been engaged in a long-lived antitrust disagreement with the EU. The current, record-breaking amount being demanded brought the total amount of fines imposed to just under $2.5 billion.

EU regulators said Microsoft was the first to disobey an EU an anti-trust ruling after the firm was found guilty of not providing key code to rival software makers.

"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," EU Competition Commissioner Neelie Kroes said.

Last year, The European Court of First Instance denied Microsoft's appeal of a 2004 ruling which demanded that Microsoft pay a fine of $613 million for attempting to shut out its rivals.

Microsoft had charged a royalty fee of 3.87 percent of a licensee's product revenues for patents while demanding 2.98 percent of revenues from companies looking for crucial communication information.

Under pressure from the EU, Microsoft lowered the patent rate to 0.7 percent and the information license to 0.5 percent in Europe alone.

News of the fines came just under a week after Microsoft announced that it would begin sharing information about its products with its competitors in an effort to become more compatible with other developing software.

"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," Microsoft said.

"Talk is cheap," Kroes replied. "Flouting the rules is expensive."

"We could have gone as high as 1.5 billion euros ($2.23 billion). The maximum amount is higher than what we did at the end of the day."


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