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MS vs. EC: Why the fine is unfair and the trustee appointment is wrong

Or not…

Internet Security Threat Report 2014

On a sunny afternoon in Luxembourg we enter the final lap of this five day case - discussion on the size of the €500m fine and other impositions of the remedy.

None of the legal teams had produced a child during the break, so Mr Bellis got straight into attacking the commission imposition of a trustee.

Bellis said the commission had the right to impose fines and penalties but not to force Microsoft to pay the expenses and salary of the Trustee - the man charged with ensuring the software giant comply with the remedy. Bellis also said the commission was illegally delegating its power to investigate Microsoft.

Mr Forrester was up next to dispute the fine, which he described as “deplorable. He said the size of the fine was coloured by what people would think, or that a large fine would equal large headlines. Bellis returned briefly to quote precedents of unexpected infringements of competition law which had resulted in very small or non-existent fines - the UK Post Office and Deutsche Post case resulted in a €1,000 fine.

Forrester said each step of the calculation of the size of the fine was dubious. The calculation based on 7.5 per cent of Microsoft turnover in server operating systems included all server sales rather than the very limited market definition of file, print and user directory functions used as the basis for the complaint.

This amount was then doubled because Microsoft was such a big company it should have had better legal advice. This was unfair because the offences were new and untested so it could not have know it was in breach of them.

The commission then increased the fine again because of the long period of infringement - five years, because Microsoft asked for delays to proceedings and because it engaged in settlement discussions with the commission.

Mr Castillo got to his feet to defend the commission decision. He denied the decision rested on new abuses which Microsoft could not have predicted.

Next, he defended the size of the record €497m fine. He described this as 0.3 per cent of Microsoft’s turnover during each year of the abuse or the profit the company has made in the last five days - the period of the hearing.

Mr Whelan defended the role of trustee because: “If the proposal was agreed between Microsoft and the commission then Microsoft can hardly complain. The two parties agreed so Microsoft can agree.” He denied the commission was improperly delegating investigating powers to the Trustee or that enforcement powers were involved at all. He said it was fair for Microsoft to pick up the tab for the Trustee’s salary and expenses because they have to bear the expense of other reporting to show they were compliant with the decision. ®

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