Bloomberg News

Microsoft Challenge to EU’s 899 Million-Euro Fine Rejected

June 27, 2012

Microsoft Corp. (MSFT:US) lost a European Union challenge to an 899 million-euro ($1.1 billion) antitrust fine, with a court saying it “essentially” upheld the penalty.

The EU General Court cut the fine by 39 million euros, or 4.3 percent, to 860 million euros in a ruling today. The Luxembourg-based tribunal rejected all of Microsoft’s arguments over the fine levied by the European Commission for the company’s failure to obey an order to share data with rivals.

The fine was on top of Microsoft’s earlier penalties of 497 million euros and 280.5 million euros in the antitrust case and surpassed only by a 1.06 billion-euro levy against Intel Corp. during a period of EU scrutiny of U.S. technology companies.

The court’s endorsement of the fines “is likely to embolden the commission in pursuing procedural violations,” said Suzanne Rab, a lawyer at King & Spalding LLP, Rab worked on assignment at PricewaterhouseCoopers LLP in 2008 on matters unrelated to its work monitoring Microsoft’s compliance with the EU order, she said.

Microsoft’s Windows software powered 95 percent of personal-computers in 2004, when EU regulators fined the company a record 497 million euros and ordered it to offer a version of the software without a music and video player. Now, amid a global slump in PC sales, Microsoft is preparing to manufacture its first tablet to challenge Apple Inc.’s iPad.

Fines Paid

Microsoft, based in Redmond, Washington, said while it was disappointed, it paid the fine several years ago. The world’s largest software company can challenge today’s decision at the EU’s highest court, the European Court of Justice. Microsoft didn’t appeal a court ruling it lost in 2007 that sought to overturn the 2004 order, unaware that judges were split 7-6.

Today’s ruling backed the EU’s so-called periodic penalty calculated because Microsoft was in breach of the EU order for 488 days, regulators said in 2008. The court cut the fine to take into account a letter from the commission in 2005 that accepted limits on Microsoft’s supply of information to open- source software developers.

Joaquin Almunia, the EU’s antitrust chief, said the judgment “fully vindicates the enforcement action that the commission took to ensure Microsoft’s compliance with its obligations,” paving the way for “a range of innovative products that would otherwise not have seen the light of day.”

Microsoft is the only company in more than 50 years of EU competition policy penalized for failing to comply with an order. The company reached a settlement in 2009, which allowed today’s appeal, in a bid to repair the company’s relationship with the European Commission.

Microsoft is now on the other side of the fence, filing complaints against Google Inc. (GOOG:US) and what is now its Motorola Mobility unit.

The case is T-167/08, Microsoft v. European Commission.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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