EU Court Slightly Reduces Microsoft Fine
06/27/2012| 04:45am US/Eastern
-- EU's second-highest court slightly reduces fine
-- Microsoft "disappointed" with EU General Court's ruling
-- Fine relates to failure to open up software access to rivals
LUXEMBOURG--Microsoft Corp. (>> Microsoft Corporation) suffered a blow in its long-running battle with European Union regulators Wednesday, as Europe's second-highest court upheld a billion dollar fine imposed in 2008 for failing to comply with an order to share product information with competitors.
The European General Court did reduce the fine slightly to EUR860 million euros ($1.07 billion) from EUR899 million originally, but it rejected the software giant's argument that the Commission wasn't justified in imposing the penalty for failing to obey orders four year earlier to open up the software market to rivals.
Microsoft said in statement it was disappointed. Microsoft's lawyers had argued during a court hearing in May 2011 that the fine, which at the time amounted to 2% of Microsoft's revenue, was undeserved and excessive.
The ruling marks over a decade of legal conflict between Microsoft and the Commission, which began in 1998 when Sun Microsystems lodged an antitrust complaint over the Windows operating system.
The 2008 penalty set a new record when it was imposed by EU regulators, who accused the U.S. software giant of not making the changes they had demanded four years earlier and failing to give rivals enough information to design products that could run on its Windows PC operating system. It was the first time the Commission had fined a company for not following through on its orders.
The non-compliance fine was almost double the original EUR497 million penalty, which the commission had imposed on Microsoft for abusing its dominant position to shut out competitors. At the time, Bill Gates had lashed out and accused rivals of using the Commission to "castrate" his new operating system.
The decision by the General Court of the EU will come as a huge relief to the commission as it seeks to pursue companies for failing to carry out its orders in antitrust cases.
"This is a vindication of the tough line that the Commission had taken in enforcing its decision," said Michael Reynolds, a senior partner with Allen & Overy, a law firm in Brussels. "It will bolster EU's regulators' already very strong powers. Any company in a dominant position that's under investigation should take note of this."
European Competition Commissioner Joaquín Almunia said the ruling "fully vindicated" steps taken by regulators to get Microsoft to disclose information to its competitors. Thanks to this "a range of innovative products that would otherwise not have seen the light of day were introduced on the market," Mr. Almunia said in a statement.
It was unclear early Wednesday if Microsoft would appeal the decision and take the case to the EU's highest court.
"I'd be surprised if Microsoft decided to appeal, particularly now as they want to work building a new relationship with the Commission," said Mr. Reynolds, referring to an ongoing investigation of Google (>> Google Inc), in which Microsoft is among the chief plaintiffs.
The outcome will be seen as a litmus test by other companies that are embroiled in legal battles to reduce or overturn EU fines. Chip maker Intel Corp. (INTC) is set to appear before the court in a hearing that starts on July 3 as it seeks to overturn a EUR1.06 billion penalty handed down by the commission in 2009. The fine is the highest ever by the EU on a single company.
"The outcome of the case is likely to be instructive for other companies challenging hefty antitrust fines before the EU courts," said Suzanne Rab, a partner at King & Spalding, a London-based law firm.
"In the case of Intel, the issues raised are different from the Microsoft case, [but] both companies maintain that the fines imposed were excessive and disproportionate and therefore unlawful under EU law."
--Write to Vanessa Mock at firstname.lastname@example.org