Brussels threatens more Microsoft fines

Microsoft was on Thursday dealt a serious setback in its long-running antitrust battle with the European Commission when Brussels threatened to impose yet another massive fine on the US software group for failing to comply with a landmark competition ruling handed down almost three years ago.

Europe’s top antitrust regulator on Thursday issued a new set of charges against Microsoft, a step that is likely to result in another ruling and a new fine against the group.

Since the Commission opened its probe against the world’s largest software maker more than eight years ago, Microsoft has been fined close to €780m ($1bn) for abusing its dominant market position and failing to respect the regulator’s ruling.

The Commission refused to comment on the size of any new fine that could arise from Thursday’s charges. However, Brussels could – in the worst-case scenario for Microsoft – hit the group with a penalty in excess of €800m.

The Commission accused Microsoft of demanding excessive royalties from companies wishing to license technical information about its Windows operating system. The order to make such information available to rivals formed a key plank of the Commission’s March 2004 ruling against the group.

The Commission stressed that Microsoft was the first group to be accused of ignoring a European Union antitrust ruling. “This is a company which apparently does not like to have to conform with antitrust decisions,” said the spokesman for Neelie Kroes, the EU competition commissioner.

Brad Smith, Microsoft’s general counsel, rejected the Commission’s allegations, pointing out that the group had “spent three years and many millions of dollars to comply with the European Commission’s decision”. He said Microsoft’s proposed pricing scheme would in fact be 30 per cent cheaper than comparable licensing fees.

Under the terms of the 2004 ruling, Microsoft has to make available “interoperability” information to other software makers so that rivals can design server software that functions smoothly with Windows-driven computers and servers.

The Commission said on Thursday it had found “no significant innovation in the interoperability information”.

It also claimed that companies were being asked to give Microsoft 35 per cent of the net operating profits they made by selling products designed with the help of the licence.

The original 2004 ruling is under appeal in front of an EU court, which is expected to issue its ruling in the next six months. Should it decide to overturn the Commission decision, the regulator would have to pay back all the fines imposed so far.