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December 22, 2005

EU has lump of coal for Microsoft’s stocking

Posted by David Hunter at 11:24 AM ET.

Over at the European Commission, they’ve been making a list and checking it twice and have decided that Microsoft’s been naughty, not nice:

The European Commission threatened U.S. software giant Microsoft with daily fines on Thursday for failing to comply with antitrust sanctions a year after a top European Union court rejected its appeal.

The EU executive said it may fine Microsoft up to 2 million euros ($2.37 million) a day unless it complies with an order to provide interface information to allow rivals’ group servers to work with the company’s ubiquitous Windows operating system.

“I have given Microsoft every opportunity to comply with its obligations. However, I have been left with no alternative other than to proceed via the formal route to ensure Microsoft’s compliance,” EU Competition Commissioner Neelie Kroes said in a statement.

The Commission said that in its view, supported by two reports from a Monitoring Trustee appointed by mutual agreement, Microsoft had not yet provided full specifications.

“This is an important and essential step. It is a year to the day since the Court of First Instance in Luxembourg ordered Microsoft to comply with the Commission’s decision, and it is about time it did,” said lawyer Thomas Vinje, a partner at Clifford Chance in Brussels, who represents an association of rival software producers, SIIA.

The Monitoring Trustee had found that “any programmer or programming team seeking to use the Technical Documentation for a real development exercise would be wholly and completely unable to proceed on the basis of the documentation.”

Microsoft has five weeks to reply to the Commission’s objections, but can ask for an extension. The fines are actually backdated to Dec. 15 (corrected at source – ed.).

Related: The Brussels elves have been busy lately – EU releases new monopoly guidelines and encourages antitrust lawsuits

Update 11:24 AM: Brad Smith, Microsoft SVP and General Counsel responds:

“We believe today’s Statement of Objections is unjustified. The Commission has issued this Statement regarding technical documentation we submitted last week, even though by its own admission neither it nor the Trustee have even read or reviewed these new documents.

“We revised the technical documents last week at the Commission’s request, responding to new feedback raised with us only six days before. In the interest of due process, we think it would have been reasonable for the Commission and the Trustee at least to read and review these new documents before criticizing them as being insufficient.

“We are fully committed to comply with the Decision. We’ve shipped a new version of Windows, we’ve paid an historic fine, and we’ve provided unprecedented access to Microsoft technology to promote interoperability with other industry players. In total, we have now responded to more than 100 requests from the Commission. We continue working quickly to meet the Commission’s new and changing demands. Yet every time we make a change, we find that the Commission moves the goal post and demands another change.

“Of particular concern is the Commission’s latest demand that the internal workings of Windows be documented and licensed, which can open the door to the production of clones of parts of the Windows operating system. During the September 3, 2004 hearing with President Vesterdorf, the Commission clearly stated this was not within the scope of its decision. Yet the Commission confuses disclosure of the source code with disclosure of the internals and insists that it will fine the company if it fails to address this.

“We will continue to take new steps to address each new demand from the Commission, in order to ensure our compliance with the Commission’s March 2004 decision in a timely manner. At the same time, we will contest today’s Statement to the full extent permitted under EU law, including a full Oral Hearing on these issues.”

Filed under Antitrust, General Business, Governmental Relations, Legal

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4 Responses to “EU has lump of coal for Microsoft’s stocking”

  1. Microsoft News Tracker » Microsoft vs. EU analysis Says:

    [...] There are a variety of analyses of the continuing Microsoft wrangle with the European Commission after yesterday’s announcement of daily fines for Microsoft noncompliance, but I was struck by Microsoft’s Continental Quagmire by Olga Kharif at BusinessWeek online: It may make more financial sense in the long term for Microsoft to pay the fine and hold off on providing much more documentation. Some of the code the commission requested relates to the inner workings of Windows, and its release “can open the door to the production of clones of parts of the Windows operating system,” says Smith, who believes that the release of this code wasn’t originally part of the EC’s sanctions. [...]

  2. Microsoft News Tracker » Microsoft seeks EC compliance delay Says:

    [...] You may recall that the daily fines were threatened just before Christmas. A decision on the extension will be made by Wednesday. Filed under Legal, Governmental Relations, General Business, Antitrust Listen to this article   [Permalink] [...]

  3. Microsoft News Tracker » Microsoft offers source licenses to resolve EC complaint Says:

    [...] In related news, the European Union’s Court of First Instance announced that a hearing on Microsoft’s appeal against the Commission decision of March 2004 would be held from April 24 to 28. Microsoft is supposed to comply with the decision pending appeal and this latest kerfuffle is due to the EC’s December ordering of penalties because of what they deemed to be inadequate compliance. [...]

  4. Microsoft News Tracker » European Commission immediately rejects one of Microsoft’s arguments Says:

    [...] The Commission claims that materials which Microsoft contends the Commission ignored, were received on Dec. 26 after the Commission had already issued its ruling. [...]

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