Money Matters - Simplified

European Regulators Threat Microsoft With Fine Again

BRUSSELS: European Union regulators won backing from member states to fine Microsoft Corp. for failing to comply with an antitrust order.

The fines are reported to go as high as $ 256 million a day and will be backdated to December 15, and could therefore reach as much as 400 million euros.

EU national regulators are expected to meet again next Monday to discuss the size of daily fines that could be imposed on Microsoft starting in the coming weeks.

The European Commission would take a final decision on the fines on July 12 or 19, although the first date is more likely.

After a five-year investigation, the commission took its biggest competition decision ever in March 2004 in ruling that Microsoft had broken EU law by using a quasi-monopoly in personal computer operating systems to thwart rivals.

The European Union's executive arm fined the software group a record 497-million euros for abusing its dominant market power.

It also ordered the company to sell a version of its Windows operating system without its Media Player software and to divulge information about Windows needed by makers of rival products.

Although Microsoft has paid the fine, it has fought tooth-and-nail over the information it is supposed to divulge to competitors.

Frustrated that Microsoft has not complied with the ruling, Brussels has threatened to slap new daily fines on Microsoft, backdated to December 15 - its deadline to respect the ruling.

"The commission is treating Microsoft like a criminal," Ronald Cass, president of legal consulting firm Cass & Associates and a former adviser to Microsoft, said yesterday. "Microsoft is hit because they don't understand what is being asked and then they're hit harder if they don't answer."

Competitors and regulators say the Redmond, Wash.-based software maker, whose products run on about 95 per cent of the world's personal computers, resisted complying with an order to disclose how Windows communicates over a network.

"We believe fines to be unjustified and unnecessary," Horacio Gutierrez, Microsoft's associate general-counsel, said in an e-mail to employees last week.

The company's top lawyer, general-counsel Brad Smith, said in March that Microsoft has already released "complete and accurate" data on Windows, including some 12,000 pages of technical information. The company yesterday said it was still working to comply with the EU's latest demands, following hearings in April with a trustee appointed to ensure compliance.

"Microsoft is dedicating massive resources to ensure we meet the aggressive schedule and high quality standard set by the trustee and the commission in this process," the company said yesterday. "Our engineers are working around the clock to meet the seventh and final delivery date for this project, scheduled for July 18."

European Regulators Threat Microsoft With Fine Again
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