Risk & Compliance

Europe Seeks Record Fine for Microsoft

Other proposed remedies, however, may have a more enduring effect.
Stephen TaubMarch 24, 2004

Mario Monti, the European competition commissioner who in the past has blocked a number of large, high-profile mergers, is seeking to fine Microsoft Corp. $613 million for allegedly abusing its Windows monopoly, according to the Financial Times.

This would be the highest penalty imposed on a company by the European Union, added the paper. The current record was assessed against Hoffmann-La Roche AG for its part in a vitamins cartel.

Though the fine might almost be inconsequential for a company with more than $50 billion cash on hand, two other proposed remedies may have more of a lingering effect. Microsoft must offer a version of its PC operating system without Windows Media Player, and it must license — at a reasonable price — information so rival manufacturers can make their servers as compatible with the operating system as Microsoft’s own servers.

The 20-member European Commission will formally decide the case on Wednesday. Microsoft intends to appeal the case and to ask that implementation of any remedies be delayed until the appeals process is concluded — a process that could take years, observed Reuters.

The FT explained that EC fines are based on factors such as the gravity of the offense and the time for which it continued — five years and five months in the case of Microsoft. The paper also said the fine might have been doubled because of the company’s global operations — an assessment with which the company took exception.

Horacio Gutierrez, Microsoft’s chief European legal counsel, told the paper, “We believe it’s unprecedented and inappropriate for the Commission to impose a fine on a company’s U.S. operations when those operations are already regulated by the U.S. government and the conduct at issue has been permitted by the Department of Justice and a U.S. court.”

The company is also reportedly arguing that it shouldn’t be fined since it could not have known it was breaking EU competition law.

In 2001 a U.S. appeals court determined that Microsoft broke antitrust rules, but Reuters noted that critics of the U.S. ruling have maintained that those remedies did not encourage vigorous competition.