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EC jacks up Microsoft fine by €899m

First company ever fined for failure to comply

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The European Commission has added another €899m ($1.35bn) to the fine Microsoft must pay for failing to comply with the original anti-trust ruling in 2004.

The fine covers the period from the 2004 decision to 22 October, 2007. The decision found that Microsoft was charging competitors too much for interoperability information for its servers.

Competition Commissioner "Steelie" Neelie Kroes was scathing in a statement: "Microsoft was the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an anti-trust decision... I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance."

It is the largest fine the EC has ever imposed on a single company.

The fine comes on top the original penalty of €497m, giving a total of €1.35bn or $2.038bn.

Microsoft reduced its royalty claims for licensees from 3.87 per cent to 0.7 per cent in May 2007 following European Commission objections. This was finally reduced to 0.4 per cent in October 2007.

Microsoft sent us the following statement: "We are reviewing the commission's action. The commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about past issues that have been resolved. As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are focusing on steps that will improve things for the future."

Last week, Microsoft announced broader and freer access to its APIs which many observers saw as a way to head off future competition claims as well as potentially reassuring regulators about the market impact of its takeover of Yahoo!.

The timing could hardly be worse for Microsoft which is today launching Windows Server 2008.

The whole EC statement is available here. ®

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