E.U. Slaps Third Fine on Microsoft

This set of flagpoles sits at one of the entrances to Microsoft Corporation in Redmond, Wash., Monday, Oct.19, 1998. The European Union is fining Microsoft Corp. $1.3 billion for charging rivals too much for software information. EU regulators say the company charged
This set of flagpoles sits at one of the entrances to Microsoft Corporation in Redmond, Wash., Monday, Oct.19, 1998. The European Union is fining Microsoft Corp. $1.3 billion for charging rivals too much for software information. EU regulators say the company charged "unreasonable prices" to software developers who wanted to make products compatible with the Windows operating system. The fine is the largest ever for a single company and the first time the EU has penalized a business for failing to obey an antitrust order. (Joe Brockert - AP)

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By Kevin Sullivan
Washington Post Foreign Service
Thursday, February 28, 2008

LONDON, Feb. 27 -- European Union antitrust regulators fined Microsoft $1.3 billion on Wednesday, the largest fine they have ever imposed on a company, in the latest round of a nearly decade-long dispute in which the U.S. software giant was accused of abusing its global market dominance.

"Microsoft's behavior did not just harm a few individuals or a handful of big companies," said Neelie Kroes, the E.U.'s competition commissioner, announcing the decision in Brussels. "Directly and indirectly this had negative effects on millions of offices in companies and governments around the world."

The fine was the third the E.U. has levied against Microsoft in the same dispute -- once after being found to have violated antitrust law, and twice, including this latest, for what officials called a refusal to comply with orders to change its practices.

In a statement, Microsoft said that it was reviewing the decision but that "these fines are about past issues that have been resolved." The company pointed to its announcement last week that it would make technical data on its products more accessible to competitors, a key aspect of the European complaints. "We are focusing on steps that will improve things for the future," Microsoft said.

Roger Kay, president of research and consultancy firm Endpoint Technologies Associates, said the ruling showed differing approaches to antitrust in the United States and Europe. "In the U.S., the electorate has decided to leave big business alone to figure out how things should be done best. In Europe, it's the other way around."

European regulators have now fined Microsoft a total of about $2.5 billion (at current exchange rates). Kroes said it is the first company ever to refuse to comply with a European Commission antitrust ruling.

"That the commission has been forced to levy these three fines reflects a clear disregard by Microsoft of its legal obligations," Kroes said. "The commission's fine is a reasonable response to a series of quite unreasonable actions."

She said her message to Microsoft and other companies was: "Talk is cheap; flouting the rules is expensive. We don't want talk and promises -- we want compliance."

Analysts said that even though the fine was exceptionally large, it was more of a warning to other companies than a financial burden on the world's leading computer software maker.

"Financially it's not significant; it is much more of a scary number to everybody else than it is to Microsoft," said David B. Yoffie, a professor at Harvard Business School.

Yoffie said E.U. regulators were using Microsoft to send a strong warning to other companies to heed European regulations. He said E.U. regulators are currently probing U.S. technology companies such as Google, Qualcomm, Intel and Rambus. Microsoft itself is facing two new E.U. antitrust investigations that began in January.

Iain Begg, a professor at the European Institute of the London School of Economics, said the fine may not hurt Microsoft, "but it's still enough to say to other companies, 'Don't mess with us, and if you do we'll hit you with fines that your shareholders will squeal about.' "


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