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  Macro Fine for Microsoft: EU Slaps Software Giant with 899 Million Euro Penalty

Macro Fine for Microsoft EU Slaps Software Giant with 899 Million Euro Penalty

The European Commission on Wednesday levied the biggest fine in its history against Microsoft, penalizing the software company to the tune of €899 million. Microsoft has pledged to mend its ways -- again.

The last decade has been anything but a love affair in the relationship between Microsoft and the European Union. But on Wednesday, the ongoing tiff reached a new low. The European Commission fined the software giant a jaw-dropping €899 million ($1.35 billion) for failure to comply with an antitrust verdict reached in 2004. The fine puts the total amount levied by the EU against Microsoft at a whopping €1.7 billion ($2.5 billion) in the 10-year battle.

"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," said European Competition Commissioner Neelie Kroes said in a statement. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance."

Wednesday's fine stems from non-compliance between June 21, 2006 and Oct. 21, 2007 and carries over from an earlier fine of €280.5 million for heel-dragging before that. Microsoft finally caved in late last year and made the changes to its software required by the Commission to allow greater competition. In a Wednesday statement, Microsoft said the most recent fine had to do with "past issues," and that the company was leaving the incident behind.

The record fine stems from a 1998 case triggered by Sun Microsystems, which complained that Microsoft had not required adequate technical information enabling non-Microsoft products to operate on computers running Microsoft Windows. In a number of decisions at the beginning of this decade, the Commission found that Microsoft was abusing its dominant market position to squelch competition and ordered it to make more information available so that server operating systems from other companies -- such as Sun -- could work with PCs running Windows. The first fine of €497 million was levied in 2004.

The EU also objected to Microsoft's pricing structure, which asked any rivals using the inter-operability information to pay 3.87 percent of their revenues in patent royalties and an additional 2.98 percent for a license giving them access to the additional information. The 2004 verdict was re-affirmed in 2007 and Microsoft finally quit charging those prices in late October. The new rates foresee a flat fee of €10,000 for the special license and royalties of 0.4 percent.

Despite Microsoft now pledging to behave from now on, Commissioner Kroes on Wednesday was in no mood to ease the pressure. She warned that the Commission could have fined the company as much as €1.5 billion and noted that Microsoft remains under investigation for similar infractions. "Talk is cheap," she said. "Flouting the rules is expensive."

cgh/ap/reuters