EC fines Microsoft $1.35 billion for defying sanctions

Mumbai: The European Commission has imposed an additional 899 million euros ($1.35 billion) fine on software giant Microsoft Corporation for defying sanctions imposed for antitrust violations. This brings total EU penalties on Microsoft so far to 1.68 billion euros ($2.52 billion).

The commission had earlier fined Microsoft 778 million euros ($1.17 billion) for abusing its dominance in the software market and failing to abide by the antitrust ruling.

The EC, the executive arm of the European Union, said no other company had ever ignored sanctions.

"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," 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 with the commission's March 2004 decision," she added.

The EC had fined Microsoft 497 million euros in March 2004 and ordered the company to open some key software to rivals, allowing them to make compatible products.

In July 2006, the commission followed it up with a further 280 million euros fine on the software giant for ''failure'' to comply with its original ruling.

Last September Microsoft lost a court appeal against the EC ruling.
But, Microsoft's troubles with EU competition regulators were far from over.

Bolstered by the court victory, the European Commission launched a new investigation targeting the interoperability of a broad range of software, including Microsoft's popular Office package, with rival products.

In its latest order, the EC asked Microsoft to pay additional penalties in daily fines running from June 21, 2006 to October 21, 2007, because "Microsoft continued to abuse its powerful market position after the commission's March 2004 decision requiring it to change its practices."

Kroes said Microsoft had failed to charge rivals reasonable prices for access to key information about its work-group or back-office servers in contravention of the 2004 EC ruling.

"Microsoft continued to stifle innovation by charging other companies prohibitive royalty rates for the essential information they needed to offer software products to computer users around the world," she added.

Microsoft, however, said it was "reviewing the commission's action" and highlighted that the latest EU action targeted "past issues."

"The commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved," the company said.

Last week Microsoft said it was making "broad-reaching changes" to its technology and business practices to enhance the ease with which its software interacts with partners, customers, and competitors.

However, the commission ignored the move, saying that it had lost faith in Microsoft's promises.