EU orders Microsoft to pay record fine for overcharging rivals

EU orders Microsoft to pay record fine for overcharging rivals
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First Published: Wed, Feb 27 2008. 06 31 PM IST
Updated: Wed, Feb 27 2008. 06 31 PM IST
AP
Brussels: The European Union fined Microsoft Corp. a record €899 million (Rs5,379 crore) on Wednesday for charging rivals too much for software information.
EU regulators said the company charged “unreasonable prices” until last October to software developers who wanted to make products compatible with the Windows desktop operating system.
The fine is the largest ever for a single company.
Microsoft immediately said that these fines were about past issues that have been resolved and the company was now working under new principles to make its products more open.
But EU Competition Commissioner Neelie Kroes warned that the company was under investigation on two other separate cases.
Microsoft’s actions stifled innovation, hurting millions of people who use computers in offices around the world, she said, calling the fine was “a reasonable response to a series of quite unreasonable actions.”
“We could have gone as high as €1.5 billion,” she said. “The maximum amount is higher than what we did at the end of the day.”
Microsoft fought hard against a March 2004 decision that fined it €497 million and ordered it to share interoperability information with rivals within 120 days, taking an appeal to an EU court that it lost last September.
The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software — where it is the world’s leading supplier — to squeeze into a new market and damage rivals that make programs for workgroup servers that help office computers connect to each other and to printers and faxes.
The company delayed complying with the EU order for three years, the EU said, only making changes on 22 October last year to the patent licenses it charges companies that need data to help them make software that works with Microsoft.
Microsoft had initially set a royalty rate of 3.87% of a licensee’s product revenues for patents and demanded that companies looking for communication information — which it said was highly secret — pay 2.98% of their products’ revenues.
The EU complained last March that these rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7% and the information license to 0.5% — but only in Europe, leaving the worldwide rates unchanged.
The EU’s Court of First Instance ruling that upheld regulators’ views changed the company’s mind again in October when it offered a new license for interoperability information for a flat fee of €10,000 and an optional worldwide patent license for a reduced royalty of 0.4%.
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First Published: Wed, Feb 27 2008. 06 31 PM IST
More Topics: European Union | EU | Microsoft | Patent | Licence |