Expert: EU Microsoft competition fine could reach $7bn
Oh go on, Brussels, give it to Greece
Microsoft could face a fine of up to $7bn (£4.49bn) if EU competition regulators find that the company failed to comply with a "critical remedy" it agreed to implement in 2009 to alleviate concerns that it was acting anti-competitively, an expert has said.
The European Commission has opened an investigation into whether Microsoft failed to adhere to a "legally binding commitment" it gave in 2009 to provide users of its operating system with a screen enabling those users to easily choose between different internet browsers.
The EU's Competition Commissioner, Joaquín Almunia, has said that Microsoft told the Commission in December last year that it was still using the browser-choice screen despite evidence in the hands of the regulator suggesting that the company stopped displaying the screen in February 2011 following the launch of Windows 7 Service Pack 1.
Microsoft has admitted that it had "fallen short" of its "responsibility" and blamed a lack of an update to its Windows 7 package on a "technical error", according to a statement issued by the firm and reported by The Register.
However, competition law specialist Alan Davis of Pinsent Masons, the law firm behind Out-Law.com, said that the Commission is unlikely to provide Microsoft with much leniency if it decides that sanctions should be imposed on the company following its investigation.
"Given the strength of Microsoft's dominant position in the PC operating software market at the time, this was a critical remedy to deal with the serious competition concern about Microsoft tying its Internet Explorer web browser product to its PC operating software," Davis said. "Microsoft managed to avoid very significant fines being imposed by entering into this commitment back in 2009. By failing to honour that commitment, the Commission is now able to impose huge fines of up to 10 per cent of Microsoft's turnover, meaning potentially up to $7bn."
"This is the first time that a commitment has been broken by a company in this position. Given the resources available to Microsoft to monitor its compliance with the commitment, the Commission is unlikely to have much sympathy for their arguments that this was a mistake or a technical glitch," he said.
"Microsoft will have an uphill battle to persuade the Commission that fines shouldn't be imposed as the Commission will also want to send out a deterrence message to other companies about how seriously they take compliance with commitments," said Davis. "The Commission has also announced that it is going to strengthen the monitoring and enforcement of commitments in these types of cases in the future including the requirement to have a stronger role for monitoring trustees, something that is already common in merger investigations."
In 2008 the Commission had launched a case which argued that Microsoft's 'tying' of its Internet Explorer web browser to its near-universally used Windows operating system was a breach of its dominant market position, in violation of EU competition rules. However, the Commission dropped its case against Microsoft in December 2009 after the software giant agreed to offer Microsoft Windows users a screen through which they could choose non-Microsoft browsers.
Almunia said that Microsoft would be punished if it is found to have reneged on its promise.
"We take compliance with our decisions very seriously," the Commissioner said. "And I trusted the company's reports were accurate. But it seems that was not the case, so we have immediately taken action. If following our investigation, the infringement is confirmed, Microsoft should expect sanctions."
Earlier this year the EU's General Court ordered Microsoft to pay €860m as a fine for failing to comply with European Commission demands to do more to help rival technologies achieve interoperability with its technology.
The European Commission is responsible for investigating possible abuses of dominant market position under the Treaty on the Functioning of the European Union (TFEU).
Such abuse can include by "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; limiting production, markets or technical development to the prejudice of consumers; and applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage" amongst other possible abuses, the TFEU states.
Copyright © 2012, Out-Law.com
Out-Law.com is part of international law firm Pinsent Masons.
Re: What a ridiculous situation
the market condition that exists when there are few sellers, as a result of which they can greatly influence price and other market factors. Compare duopoly, monopoly
The point you are missing is this is not about corporate users for whom a sysadmin sets up the approves configuration, nor for readers of El Reg who fully understand how to install other browsers and/or configure search engine choices.
This is about Joe Public who can't tell the difference between an address bar and a search engine, and for whom the blue 'e' was "The Internet". Once most of them are using an OS-specific browser you get the stupidity and lock-in seen, for example, in a lot of South Korean banks where you need an ActiveX plug-in for on-line banking.
And so you can keep your hands tightly around consumers genitals and squeeze them for all the money you can with little chance of them moving way from your cash-cow.
That is what the EU has acted for, and given the size of MS and their inability to keep a promise, I don't think 10% fine is out of the question. Please educate yourself on the whole anti-trust proceedings that started with MS moving against Netscape before arguing about it.
Microsoft had a monopoly, used it for a decade to destroy their competition and always got away with it. Now they lost their monopoly, but have to pay up for their old sins. Justice delayed is better than justice denied.
Re: And again...
"when are Apple going to be forced to comply with a similar measure for OSX?" I suspect around the time they have 80% - 90% market share and force you to purchase a copy of OSX with every computer, even if you run Windows ..er...Linux on the computer. Many of the things Microsoft gets in trouble for, as nasty as they are, would not be an issue if they did not have a monopoly on PC operating systems. Apple and Linux have eroded that a little in recent years, but Windows is still the dominant OS. Apple does some pretty nasty stuff too, but since it is a minor player they are allowed to get away with it.