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"A penny for your thoughts"

Saturday, March 1, 2008

Microsoft's record fine from EU

The European Commission issued the record fine against Microsoft for using high prices to discourage software competition.

The European Union has imposed a record fine on Microsoft. The American software giant must pay 899 milion euros, on top of a previous fine for 497 million euros. The EU is punishing Microsoft for not complying quickly enough with its 2004 anti-monopoly ruling.

Microsoft has not decided whether to appeal the penalty, which amounts to a fraction of the $14.07 billion it earned in fiscal 2007. In all, the company has been fined just under $2.4 billion by European antitrust regulators over the years.

Barring an appeal, the fine shuts the door on an investigation into Microsoft's behavior that was triggered by a 1998 complaint by Sun Microsystems Inc. It alleged Microsoft was refusing to supply information that servers need to work with its market-dominating Windows operating system.

Microsoft eventually made the information available to rivals, but the EU said it charged "unreasonable prices" until last October."

This is a fine for past behavior," said Rosoff, unrelated to Microsoft's offer for Yahoo, which was valued at $44.6 billion in early February.

It ordered Microsoft to divulge all information necessary for other companies to develop compatible products.

The EU's Competition Commissioner, Neelie Kroes, said it was the biggest fine the EU had ever imposed on a company: "We could have gone as far as 1.5 billion euros, so the maximum amount was higher that what we demanded at the end of the day. It was reasonable, but sticking to our line. Microsoft should behave like they have to."

In January, a federal judge extended a consent decree enforcing the 2002 antitrust settlement reached among Microsoft, the U.S. government and 17 states by two years. The settlement barred Microsoft from seeking deals with computer makers to exclude competing software and aimed to keep it from using its operating system monopoly to stifle competition in other products.

The fine relates to a period from June 2006 to October 2007 when Microsoft was not cooperating with the EU. Brussels imposed a cumulative daily tariff until the company accepted the decision.

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