February 28, 2008 2:00 am

Brussels hits Microsoft with €899m antitrust fine

Microsoft has been hit with an €899m ($1.4bn) fine for failure to comply with European regulators' demands to end allegedly anti-competitive business practices.

The fine came days after the world's biggest software group announced it would open parts of its software to rival companies in an attempt to assuage competition authorities.

That move received a lukewarm reception in Brussels, where regulators have ex-pressed scepticism about Microsoft's promise to make its Windows operating system and other big-selling software more open and transparent.

Neelie Kroes, the European Union's competition commissioner, said she hoped yesterday's fine would close "a dark chapter" in a history of non-compliance with a 2004 finding that Microsoft was guilty of abusing its dominant market position for PC operating systems. Microsoft said it was re-viewing the decision.

"The [European] Commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about past issues that have been resolved," the group said in a statement.

It is the first time the EU has fined a company for failure to comply with an antitrust decision, according to Ms Kroes. "The Commission has stuck to its guns," said John Pheasant, partner at Hogan & Hartson. "It also appears the Commission has not been swayed or deflected by the recent announcements by Microsoft."

The fine stemmed from a 2004 decision requiring Microsoft to disclose "complete and accurate" technical information to allow rivals to develop products that would work with Windows.

The 2004 ruling required Microsoft to offer such information on "reasonable terms" but the Commission later said the royalty rates Microsoft demanded over the next three years amounted to "unreasonable pricing".

Microsoft fought the decision for several years but dropped its appeal in September after an EU court ruled in favour of regulators.

Yesterday's fine was the latest in a series of legal headaches for Microsoft. The company's hopes for detente with Brussels were dashed last month when the Commission said it would investigate suspicions that Microsoft had abused the market dominance of its Office software product.

The antitrust authority also said it would look at whether the group had illegally linked its Internet Explorer system to its Windows operating system.

Yesterday's fine relates to the period between June 2006 and October 2007. The earlier period was covered by a €280m penalty.

Microsoft shares slipped 0.3 per cent to $28.31.

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