EU slaps $611.8 m fine on Microsoft

David Lawsky

BRUSSELS: U.S. software giant Microsoft was slapped with a record fine for violating European Union antitrust law and ordered to take immediate steps to stop crushing software rivals.

The EU executive said Microsoft must act within four months to change the way it does business in Europe "because the illegal behavior is still going on."

The European Commission -- the enforcer of EU competition law -- levied a record 497.2 million euros ($611.8 million) fine, ordered the unbundling of Windows Media Player within 90 days and required that "complete and accurate" information be given to rival makers of computer servers within 120 days.

The Commission characterized Windows, which runs on more than 95 percent of all personal computers, as a "near monopoly."

Microsoft spokesman Tom Brookes replied: "We believe the proposed settlement would have been better for European consumers." Settlement talks ended last week.

Competition Commissioner Mario Monti said in a statement, "Today's decision restores the conditions for fair competition in the market concerned and establishes clear principles for the future conduct of a company with such a strong dominant position."

The Commission will appoint a special monitoring trustee to ensure that Microsoft's disclosures to rivals are "complete and accurate and that the two versions of Windows are equivalent in terms of performance."

The Commission said its remedy "does not mean that consumers will obtain PCs and operating systems without media players. Most consumers purchase a PC from a PC manufacturer which already has put together on their behalf a bundle of an operating system and a media player."

The Commission ruled that Microsoft bundled its own audiovisual player to damage such rivals as RealNetworks RealPlayer and Apple Computer Quicktime.

Microsoft has said it will take the decision to European Union courts in Luxembourg and try to get the remedies delayed until final appeals are over, a process that could take four to seven years or more.

Although that limits the impact of the decision, the Commission has shown no inclination to slow two other investigations of Microsoft it now has underway.

It will be able to cite the precedent from its decision on Wednesday in bringing the next cases, easing the way for quicker action, experts say.

The decision to go for a broad remedy follows a decade of investigations and settlements on narrow issues without any formal findings against the software firm.

A U.S. appeals court ruled unanimously in a final 2001 decision that Microsoft broke antitrust rule, but critics say the remedies there failed to encourage vigorous competition.

The Commission fine exceeds the record 462 million euro penalty imposed on Switzerland's Hoffman-La Roche AG in 2001 for leading a vitamin cartel.

Nonetheless, it amounts to slightly more than one percent of Microsoft's roughly $53 billion cash on hand. On January 22 it projected expected revenues of $8.6 billion and operating income of $3.1 billion for the current quarter.

© Reuters