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EU hits Microsoft with record 899 million euro antitrust fine
2008-02-27
EU competition regulators dealt a new blow to Microsoft on Wednesday, fining the US software giant a record 899 million euros for defying a landmark 2004 antitrust ruling. The fine, worth 1.4 billion dollars, is the biggest ever levelled against a single company in an EU antitrust case and brings the total penalties against Microsoft to just shy of 1.7 billion euros. "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. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the commission's March 2004 decision," she added. The European Commission, Europe's top competition watchdog, fined Microsoft 497 million euros in March 2004 and ordered the company to open some key software to rivals so they could make compatible products. In July 2006, the commission fined the company a further 280 million euros after determining that it was not respecting its original ruling. The commission hit Microsoft with the new penalty, the sum of daily fines running from June 21, 2006 to October 21, 2007, because it said Microsoft had failed to charge rivals reasonable prices for access to key information about its work-group or back-office servers in contravention of the 2004 ruling. "Microsoft continued to abuse its powerful market position after the commission's March 2004 decision requiring it to change its practices," Kroes told journalists. "Microsoft continued to stifle innovation by charging other companies prohibitive royalty rates for the essential information they needed to offer software products to computer users around the world," she added. In reaction, Microsoft said it was "reviewing the commission's action" and highlighted that the latest EU action targeted "past issues." "The commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved," the company said. After a five-year investigation, the commission ruled then that Microsoft had abused its share of the market for operating systems running personal computers thanks to its ubiquitous Windows programme. In particular, it accused Microsoft of using its stranglehold on PC operating systems to elbow rivals out of the more competitive markets for media players that play music and videos, and operating systems running back-office servers. Microsoft fought the decision tooth-and-nail until last September when an EU court threw out the company's appeal against the ruling, significantly strengthening the commission's hand in the long-running standoff. Despite the court ruling, Microsoft's troubles with EU competition regulators are far from over. Since its court victory, the European Commission has launched a new investigation targeting the interoperability of a broad range of software, including Microsoft's popular Office package, with rival products. Last week Microsoft said it was making "broad-reaching changes" to its technology and business practices to enhance the ease with which its software interacts with partners, customers, and competitors. However the commission gave the move a lukewarm response, saying that it had seen similar promises from Microsoft in the past. "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.
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