Brussels, 12/07/2006 (Agence Europe) - “No company is about the law,” said European competition commissioner Neelie Kroes on 12 July, announcing that the Commission had just imposed a fine of €280.5 million on Microsoft. “I sincerely regret that the company has still not put an end to its illegal conduct,” she stressed, giving assurances that a cautious approach had been adopted when assessing the situation. Finally, more than two years after the decision of March 2004 (see EUROPE 8673), Microsoft has still not fully complied with its obligations on interoperability, the College of Commissioners decided, stating that the American firm has still to provide full and accurate information on interface specifications, so as to allow other companies to make their products interoperable with Microsoft PCs and servers. This is something the Redmond firm should have agreed to long ago, after the rejecting of the appeal by the Court of First Instance in December 2004 of its request for a stay of execution of the measures imposed by the Commission (see EUROPE 8854). Similarly the appeal by Microsoft against the decision on the merits of the case, heard by the Court of First Instance at the end of April (see EUROPE 9183), the verdict of which is not expected before the end of the year, has no suspensory effect.
After many fruitless exchanges, the Commission ordered Microsoft to provide appropriate technical documentation before 15 December 2005. Working from the conclusions of the independent Trustee, appointed in October to monitor the application of the March 2004 decision, the Commission had to acknowledge that at that time its requirements had not been met. There then followed a statement of objections, in which the Commission decided on the principle of the possibility of a retrospective fine (see EUROPE 9096). Between delaying tactics, debate on the technical requirements and information through the press, the tone of the exchanges became progressively harder. Finally, despite explanations provided and new information submitted, the documentation remains incomplete, inaccurate and, therefore, unusable in the opinion of the Commission.
The decision taken on Wednesday is based on the recommendations of the Trustee and of TAEUS, the Commission's external technical adviser. Article 24§2 of regulation 1/2003 on the implementation of Articles 81 and 82 of the Treaty states that the Commission can inflict penalty payments up to 5% of daily turnover to require a firm to fall into line with a previous decision. After consulting the representatives of the national competition authorities, who firstly approved the principle of a penalty payment before discussing the amount, the Commission set the overall figure at more than €280 million. This corresponds to a daily penalty payment between 16 December 2005 and 20 June 2006 of €1.5 million. “This is the first time ever that the Commission has had to fine a company for failure to comply with an anti-trust decision,” said Ms Kroes, hoping “it will be the last”. The Commission could have been more severe, since it could have imposed a fine of over €4 million in daily penalty payments, Microsoft's turnover being over €85 million. It retains, however, the right to increase the amount set on Wednesday.
After examining the evidence, only one conclusion was possible, said the Commissioner, who felt that “Microsoft did not even come close to providing complete and accurate information”. She acknowledged, however, that the company had put in some excellent work over the last three weeks, too late to avoid sanctions this time, but perhaps sufficient to avoid an increase in penalty payments. Wednesday's decision also includes an arrangement (in line with Article 24, paragraph 1, of regulation 1/2003) stating that, if Microsoft does not fulfil its obligation to provide full and accurate interoperability information or to disseminate this information under acceptable conditions, the level of the daily penalty which could be imposed could rise to €3 million from 1st July 2006. Application of an additional penalty for non-compliance would require a further decision by the Commission. It should be noted that the tidy sum imposed on Wednesday as a penalty payment is to be added, without being linked, to the initial fine of €497 million imposed in March 2004 for abuse of dominant market position. The penalty payments will continue until the exact and detailed technical documentation is submitted, said the Commission.
Through its Vice-President Brad Smith, Microsoft told press that it would appeal against this decision. “From our point of view, the issue was never one of respect for the decision, but of its clarity,” he said, adding, “Having received more detailed information from the Commission in April, we met all the deadlines since, and our priority is to meet the final deadline in two weeks time”. The 2004 decision calling for full and accurate technical specifications contained only a few words describing what we had to provide, complained Mr Smith.
There was a very different appreciation from Microsoft's competitors, which, like SIIA (Software and Information Industry Association), welcome the Commission's decision, saying that “the delay in implementing the remedies (to restore competition) is unjustified and inexcusable”. It added that “from the beginning, the requirements facing Microsoft were clear. We hope that, with this essential step, the interoperability documentation will be forthcoming promptly and effectively”. According to ECIS (European Committee for Interoperative Systems) too, “There has never been any doubt about the precise nature and scope of Microsoft's obligations under the Commission's March 2004 Decision”, and “documenting specifications to enable interoperability is common practice in this industry”. In the opinion of ECIS, Microsoft's decision to appeal suggests that the firm will continue to try to impede the implementation of the anti-trust remedies.