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Europe fines Microsoft $1.35 billion

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Europe fines Microsoft $1.35 billion

Brussels (Belgium) – The European Commission (EC) fined Microsoft 899 million Euros or $1.35 billion for non-compliance with the Commission’s March 2004 decision.

According to the EC, Microsoft has become the first company in fifty years of EU competition policy that receives a penalty for failure to comply with an antitrust decision. The organization found that Microsoft did not follow the obligations imposed under a decision dating back to March 2004 prior to October 22, 2007.  

Back then, The EC fined Microsoft 497 million Euros or almost $700 million for charging “unreasonable prices” for access to interface documentation for work group servers and had abused its dominant position under Article 82 of the EC Treaty. According to the decision, Microsoft was required to disclose interface documentation which would allow non-Microsoft work group servers to achieve ”full interoperability with Windows PCs and servers at a reasonable price.” This ruling was upheld in September of last year.

The $1.35 billion fine is imposed in addition to the original $700 million.

 “I hope that today’s Decision closes a dark chapter in Microsoft’s record of non-compliance with the Commission’s March 2004 Decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft’s future conduct,” said European Competition Commissioner Neelie Kroes in a statement.

The EC said that Microsoft initially demanded a royalty rate of 3.87% of a licensee’s product revenues for a patent license and 2.98% for a license giving access to the secret interoperability information (information license). In May of last year, the company reduced its royalty rates to 0.7% for a patent license and 0.5% for an information license for sales within Europe, while leaving worldwide rates unchanged.

The Commission said that Microsoft started on October 22, 2007 to provide a license giving access to the interoperability information for a flat fee of 10,000 Euros and an optional worldwide patent license for a reduced royalty of 0.4 % of the licensees’ product revenues.

“Today’s Decision concludes that the royalties that Microsoft charged for the information license – i.e. access to the interoperability information – prior to 22 October 2007 were unreasonable,” the EC said in a statement. “Microsoft therefore failed to comply with the March 2004 Decision for three years, thereby continuing the behavior confirmed as illegal by the Court of First Instance.”

Microsoft recently announced far-reaching changes in the way the company provides developers information which, according to the company, enables them to connect their software to Microsoft’s high-volume products just like Microsoft does.