EU prepares huge Microsoft fine

The European Union's Competition Commissioner Mario Monti is proposing a record fine of $613 million on US software giant Microsoft.

    Bill Gates' Microsoft suffering from its own success

    The penalty is a likely outcome if an expected ruling judges the company to have abused its dominant market position.


    The proposal was approved by EU competition regulators on Monday.


    Monti's spokeswoman, Amelia Torres, would not comment on the possible fine, citing the need for confidentiality, while a spokesman for Microsoft in Brussels said he was not aware of the amount proposed.


    Record amount


    If the amount is approved by the commission on Wednesday, it would be the highest fine ever imposed by the EU's executive branch against a single company for contravening competition regulations.


    To date, the biggest fine levied by the commission on a single company for infraction of competition rules was a

    462 million penalty against the Swiss chemical firm Hoffman-Laroche in 2001.


    The company was sanctioned for joining a cartel in the vitamin sector.


    The biggest fine for abuse of dominant market position -

    71 million - was levied in 1991 against the Swedish packaging firm Tetra Pak.


    Microsoft response


    Microsoft, the world's biggest software firm, has denied it abuses its overwhelming dominance to illegally crush competitors.


    The Seattle-based company run by Bill Gates has already vowed to appeal to the European Court of Justice against the expected decision by the EU commission, the European Union's executive arm.


    In addition to the expected fine, Microsoft is likely to be handed a list of "remedies" it must enact to satisfy EU competition authorities.


    Among them is expected to be a requirement that Microsoft distribute its Windows operating system in Europe without its multimedia program Media Player, to give rival products a better chance of competing.


    Monti's remedy


    Monti's service will also direct Microsoft to share programming code to enable rivals to make software that can work with its low-end servers. These enable computers to hook up to a network and are a key battleground in the IT industry.


    Media Player handles sound and visual data, such as radio and TV streams and MP3 files - a function that has become all the more important for computer users in the multimedia age.


    Monti, whose term as competition commissioner ends in October, has stuck to his guns in the face of claims by Microsoft that his verdict will do nothing for competition and everything to block innovation.


    "It is essential to have a clear principle for the future conduct of a company which has such a strong dominant position in the market," he said last Thursday.

    SOURCE: Reuters


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