Brussels, 27/02/2008 (Agence Europe) - On Wednesday 27 February, the European Commissioner for competition, Neelie Kroes, announced that the Commission had decided to impose penalty payments on Microsoft of €899 million for not having made information available to its competitors, in “reasonable conditions”, for integrating their software with certain Microsoft systems. The new sanction only applied to Microsoft's strategy involving “interoperability” from 21 June 2006 to 21 October 2007 (the date when Microsoft changed its “patent” licensing prices). A number of other aspects in the dispute between the world's number one computer company and the European Commission still need to be resolved.
Addressing the press on Wednesday, Ms Kroes declared, “In plain English this is to say that Microsoft continued to abuse its powerful market position after the Commission's March 2004 decision requiring it to change its practices”. In a press release published on the same day, Microsoft indicated that it is, “reviewing the Commission's action” but that the penalty payments target, “past issues that have been resolved”. Penalty payments are different from fines in the sense that they apply on a daily basis and can go up to 5% of daily turnover and are aimed at immediately changing behaviour. In this case, the Commission warned Microsoft in December 2005, July 2006 and again in March 2007 that the company was not complying with the Commission's 2004 decision and ran the risk of having penalty payments imposed on it. Following changes by Microsoft last October, the Commission pointed out that the company had “ignored” the 2004 decision over 488 days and had subsequently calculated the total number of penalty payments. (Microsoft's non-compliance between December 2005 and 20 June 2006 had already been subject to penalty payments of €208.5 million in total imposed on 12 July 2006).
The penalty specifically focuses on the so-called “information” licence which Microsoft provided to software information developers who needed to update work group servers that were compatible with Windows. In 2004 Microsoft requested a payment of 2.98M on the European market for income generated by developers on products that their information had helped develop. After a number of complaints from the Commission, Microsoft brought the tariff down to 0.5% in May 2007 and then finally changed tariffication in October 2007 by adopting a fixed price of € 10000. After analysing the tariffs in force before October 2007, the Commission concluded that they were excessive. Information sold by Microsoft were not only patented but also provided little real innovation and could therefore not be considered as intellectual property. These tariffs proved much higher than prices on the market for similar interoperable technology. On the other hand, the tariff in place since October 2007 now met Commission requirements.
There are a number of areas in this complex dossier that have not been affected by penalty payments. The Commission's original charges in 2004, focused on two aspects - interoperability, resolved by way of Wednesday's decision - and sales liked to the Media Player software with the Windows operations system (EUROPE 8673). Microsoft resolved this second problem by putting a Windows on the market without Media Player and known as “WindowsN” (whose sales have barely reached two thousand copies). Last September, the decision of the Court of First Instance supporting the Commission has now entered jurisprudence (EUROPE 9503). Microsoft is therefore seeking to implement far reaching changes in its practices, rather than continue to respond on a case-by-case basis. Last week it announced several initiatives to make its software more “open” to all “high volume” products (EUROPE 9608). Asked about the matter, Commissioner Kroes affirmed that, “talk is cheap…I am not naïve. Show me the changes first, then we'll see”. She then pointed out that Microsoft had issued several similar press statements over the years. In the meantime, the Commission launched two new procedures in January on sales of Windows linked systems to internet browser software, “internet explorer” and interoperability of several Microsoft software systems, including the Office programmes with competing systems (EUROPE 9580). (C.D.)