Microsoft Fined Record EU899 Million by EU Regulator (Update6)
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Feb. 27 (Bloomberg) — European Union regulators fined
Microsoft Corp. a record 899 million euros ($1.35 billion) for
failing to comply with a 2004 antitrust order to stop overcharging
for using its patents to connect to Windows.
“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, European Competition
Commissioner Neelie Kroes said in a statement today in Brussels.
“I hope that todays decision closes a dark chapter in
Microsofts record of non-compliance.
Microsoft, the worlds largest software maker, announced last
week that it will help competitors programs work better with some
products, such as Office, in an effort to allay EU regulators
concerns over its dominance. While todays ruling ends the 2004
antitrust case, for which the company was fined the previous
record 497 million euros, the EU has started two new
investigations into Microsofts business practices.
The fine brings the total penalty to 1.68 billion euros in
the case. Microsoft shares fell 12 cents to $28.26 at 4 p.m. in
Nasdaq Stock Market trading. In a statement, the Redmond,
Washington-based software maker said it would review the decision,
which found Microsoft overcharged for patent licenses that rivals
needed to connect products to the Windows operating system.
“These fines are about the past issues that have been
resolved, the company said. “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.
Increased Oversight
The commission, known for vetoing General Electric Co.s
proposed $47 billion merger with Honeywell International Inc. in
2001, has ramped up its oversight of U.S. technology companies
such as Intel Corp., Rambus Inc. and Qualcomm Inc. in recent
years. Last July the regulator charged Intel with abusing its
dominance in the computer-chip market. Its also probing potential
antitrust abuses by Rambus and Qualcomm over royalty rates on
chip-technology licenses.
Microsoft sought to limit potential EU fines by agreeing in
October to make network data available to open-source software
developers so server programs can connect to the Windows operating
system, which runs 95 percent of the worlds personal computers.
Brent Williams, a New York-based analyst with Benchmark Co.
who recommends investors buy Microsoft shares and doesnt own any
himself, said the fine isnt large enough to hurt Microsoft.
“Its not about the financial impact, he said. “If
Microsoft has $1.3 billion of cash disappearing suddenly off the
balance sheet, it doesnt affect their ability to invest in growth
at all.
Appeal Possible
Microsoft can appeal the penalty at the European courts in
Luxembourg. A European court upheld the commissions ruling
against Microsoft in September, meaning the company wasnt in
compliance for three years.
On March 1, 2007, the EU threatened Microsoft with millions
of euros in daily fines backdated to December 2005 for failing to
fully comply with the 2004 antitrust order.
Under that decision, Microsoft had to provide data to rivals
to allow servers to connect to the Windows platform. When patent
licenses were necessary for that network data, Microsoft was
required to charge “reasonable royalties.
Last month, EU regulators opened investigations into whether
Microsoft is using its dominance in word processing and
spreadsheets to thwart rivals and whether the company illegally
tied an Internet browser to Windows. Todays fine isnt related to
the new probes.
`Talk is Cheap
Benchmarks Williams said the EU will continue its
“aggressive stance toward Microsoft, ultimately helping its
rivals.
“Over time, every competitor is going to look at that and
say `is there an opportunity for me to take advantage of the fact
that Microsoft cant do X without further legal problems, and can
I exploit that?
Kroes said at a press conference that the commission would
take into consideration “any changes Microsoft makes to its
business practices that are relevant to the two new cases. She
said that its the fifth time that Microsoft has made an
announcement about improving interoperability.
“Talk is cheap, Kroes said. “Lets wait and lets find
the reality in this case. They have to deliver and implement.
In July 2006, the EU also imposed a 280.5 million-euro
penalty on the software maker for failing to license information
to rivals on how Windows communicates over a network. It was the
first time that the EU had fined a company for failing to comply
with an antitrust order.
To contact the reporter on this story:
Matthew Newman in Brussels at
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