Microsoft's EU battle drawing close with hearing

CIOL Bureau
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BRUSSELS, BELGIUM: Microsoft will seek to cut its 899 million euro ($1.3 billion) antitrust fine in Europe's second-highest court on Tuesday, marking the last chapter of a decade-long battle with EU regulators.


The European Commission fine, which set a record when it was imposed in 2008, penalized Microsoft for failing to comply with the regulator's order four years earlier to provide information that would allow other products to work with computers running its software.

Microsoft has since taken a more conciliatory approach in its relations with the Commission and rival Google Inc has adopted a similar tone in dealing with an EU regulatory probe of its Internet search practices.

"The hearing is a remnant of the old, aggressive Microsoft. The company has changed their strategy in dealing with the Commission dramatically since then," said lawyer Susanne Zuehlke, a partner at Latham & Watkins in Brussels.


"They have become more cooperative in their own matters. In addition, they have become an active complainant. The Commission has picked up several matters against other companies in line with Microsoft's business objectives," she said.

Intel watching the hearing

The hearing, in the EU General Court in Luxembourg, will be watched by companies challenging regulatory fines, among them Intel, which has appealed in EU courts against a 1.06 billion euro penalty imposed by the Commission last year.


"Even three years after the decision, the Microsoft fine remains as one of the highest ever imposed worldwide. It is therefore obvious that one key battle will be on whether the fine was excessive," said antitrust lawyer Tobias Caspary, at Fried, Frank, Harris, Shriver & Jacobson in London.

"From a legal perspective, a ruling will give some important insights as to what the Commission can do and to what extent it needs fines for failure to comply that significantly exceed the fines for the actual infringement, to have a deterrent effect," he said.

The non-compliance fine was nearly double the original 497 million euro penalty the Commission imposed in 2004 against Microsoft for abusing its dominant position to thwart competitors.


The odds are against Microsoft even though it will argue that it did not get clear instructions from the Commission on how to comply with its decision, Zuehlke said.

"If Microsoft wants to win this case in total or in part, they will somehow need to prove that their initial proposals were timely and complied with the decision, or that otherwise the Commission did not afford them due process," she said.

"The court will be mindful that the Commission's enforcement credibility is at stake, so unless the Commission made some serious mistakes in the process, the chances for Microsoft for an annulment or even a meaningful reduction of the fine appear fairly slim," Zuehlke said.