EU hits Microsoft with record fine

Software giant told to stump up €899m for charging "unreasonable prices" to software developers for information on Windows

Software colossus Microsoft has been fined a record €899m (£688m) by the EU for the amount it charges its rivals for information on its software.

Issued on Wednesday, the fine was the largest to have ever been issued to a single company and brings the total to just under €1.68bn, which the EU has demanded Microsoft pay in the long-running dispute over anti-trust issues.

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.

Remaining sceptical and explaining that Microsoft was also under investigation for two additional cases, Neelie Kroes, competition commissioner of the EU, said: "Talk is cheap - flouting the rules is expensive."

She added: “Microsoft’s actions have stifled innovation and affected millions of people around the world. The record €899m fine is a reasonable response to a series of quite unreasonable actions."

"The EU could have gone as high as €1.5bn. The maximum amount is higher than what it did at the end of the day," said Kroes.

In a statement a Microsoft representative said: “Microsoft is 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 the past issues that have been resolved.”

The EU said that Microsoft had withheld crucial interoperability information for its desktop PC software in a bid to squeeze into a new market and damage its competitors.

It also said that the software had delayed compliance for three years, only making changes in October to its patent license for competitors that needed the data to create software that works with Microsoft.

“As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are trying to focus on steps that will improve things for the future,” the Microsoft representative added.

Microsoft had previously appealed against the March 2004 decision that led to a €497m fine and an order that Microsoft should share interoperability information with rivals within 120 days. The company lost that particular appeal in September and was fined €280.5m in July 2006 for failing to obey the order.

Originally, Microsoft had a royalty rate of 3.87 per cent of a licensee’s product revenues for patents and demanded that companies looking for communication information pay 2.98 per cent of their product's revenues.

Last March, the EU complained that these rates were unfair and that Microsoft had two months to reduce its patent rates to 0.7 per cent and its license fees down to 0.5 per cent, but it only applied for Europe.