Microsoft Fined Record EU899 Million by EU Regulator (Update1)

By Matthew Newman

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, the largest EU fine ever imposed against a single company.

Today's fine brings the total penalties against Microsoft to 1.68 billion euros in the case. The company was previously fined 778 million euros for abusing its dominance in the software market and failing to abide by the antitrust decision.

``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 today's decision closes a dark chapter in Microsoft's record of non-compliance.''

Microsoft has tried to allay European antitrust concerns, announcing last week that it will help competitors' software work better with some products, such as Office. It sought to limit potential EU fines by agreeing in October to make network data available to open-source software developers so their server software can connect to the Windows operating system.

Kroes imposed the fine because Microsoft failed to charge ``reasonable'' royalty fees for patent licenses on operating system software. A European court upheld the commission's ruling against Microsoft in September, meaning the company wasn't in compliance for three years.

Redmond, Washington-based Microsoft said in a statement that it would review the decision.

`Past Issues'

``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.''

Microsoft shares traded in Germany rose 0.6 percent to the equivalent of $28.56 at 11:41 a.m. in Frankfurt, from the close of $28.38 in Nasdaq Stock Market trading yesterday.

On March 1, 2007, the EU threatened the company with millions of euros in daily fines backdated to December 2005 for failing to fully comply with the March 2004 antitrust order.

Under that decision, for which the company was fined a then record 497 million euros, 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.

New Investigations

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 its Windows operating system. Today's fine isn't related to the new probes.

In July 2006, the EU also imposed a 280.5 million-euro penalty on the software company 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.
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