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Europe Expected to Levy Big Fine Against Microsoft Europe Expected to Levy Big Fine Against Microsoft
(about 4 hours later)
BRUSSELS — European antitrust officials are expected to impose a large fine on Microsoft on Wednesday for failing to give users of the company’s Windows software the choice of competing Internet browsers. BRUSSELS — European antitrust officials are expected to impose a large fine on Microsoft Wednesday for failing to give users of the company’s Windows software the choice of competing Internet browsers.
It would be the first time the European Union has punished a company for neglecting to comply with the terms of an antitrust settlement. Microsoft and European antitrust officials reached a settlement over the browser-access issue in 2009. But last October, the Union’s antitrust chief, Joaquín Almunia, charged Microsoft with failing to live up to its terms.It would be the first time the European Union has punished a company for neglecting to comply with the terms of an antitrust settlement. Microsoft and European antitrust officials reached a settlement over the browser-access issue in 2009. But last October, the Union’s antitrust chief, Joaquín Almunia, charged Microsoft with failing to live up to its terms.
Mr. Almunia’s office could not be reached, and Microsoft officials declined to comment, although the company has previously emphasized that the failure was a mistake it regretted. Mr. Almunia’s office and Microsoft officials declined to comment. The company had previously emphasized that the failure was a mistake it regretted.
Mr. Alumunia had warned Microsoft last summer that on some occasions its software was still not providing users to the full access to competing Web browser programs, as called for in the 2009 settlement. The company apologized in July, calling it a technical problem of which it had only recently become aware. Mr. Almunia had warned Microsoft last summer that on some occasions its software was still not providing users to the full access to competing Web browser programs, as called for in the 2009 settlement. The company apologized in July, calling it a technical problem of which it had only recently become aware.
In October Mr. Almunia put Microsoft on notice that it must include adequate access to rival browsers in European versions of its next-generation operating system, Windows 8, which was about to go on sale.In October Mr. Almunia put Microsoft on notice that it must include adequate access to rival browsers in European versions of its next-generation operating system, Windows 8, which was about to go on sale.
The significance of the action expected Wednesday could reach beyond Microsoft. It come as Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about that company’s dominance of the Internet search and advertising markets. The significance of the action expected Wednesday could reach beyond Microsoft. It comes as Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about that company’s dominance of the Internet search and advertising markets.
“It’s important for the commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly especially in the fast-moving technology sector,” said Nicolas Petit, a professor in competition law and economics at the University of Liege in Belgium. “It’s important for the commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly especially in the fast-moving technology sector,” said Nicolas Petit, a professor in competition law and economics at the University of Liège in Belgium.
“The commission also has an incentive to slap on a big fine in this case to ensure that companies, which are hard to monitor, get the message that it will be costly down the road if they get caught defying settlement orders,” said Mr. Petit.“The commission also has an incentive to slap on a big fine in this case to ensure that companies, which are hard to monitor, get the message that it will be costly down the road if they get caught defying settlement orders,” said Mr. Petit.
In theory, Mr. Almunia can levy a fine totaling up to 10 percent of a company’s global annual l revenue. In Microsoft’s case that could mean a penalty of $7 billion, but analysts say it is highly unlikely to reach that level.In theory, Mr. Almunia can levy a fine totaling up to 10 percent of a company’s global annual l revenue. In Microsoft’s case that could mean a penalty of $7 billion, but analysts say it is highly unlikely to reach that level.
The largest single fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing that ruling.The largest single fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing that ruling.
Microsoft has paid a long series of fines to European regulators over the past decade.Microsoft has paid a long series of fines to European regulators over the past decade.
In 2008, Microsoft was fined nearly €900 million in so-called periodic penalties for defying a decision that regulators had imposed on the company.In 2008, Microsoft was fined nearly €900 million in so-called periodic penalties for defying a decision that regulators had imposed on the company.
In June, the General Court, the second-highest in the Union, handed a small victory to Microsoft by reducing the fine by €39 million to €860 million after finding that the commission had miscalculated the amount.In June, the General Court, the second-highest in the Union, handed a small victory to Microsoft by reducing the fine by €39 million to €860 million after finding that the commission had miscalculated the amount.
Microsoft also paid fines of €497 million and €281 million for separate but related offenses, bringing the total to €1.7 billion during its battles so far with European regulators.Microsoft also paid fines of €497 million and €281 million for separate but related offenses, bringing the total to €1.7 billion during its battles so far with European regulators.
Although Microsoft has lodged court appeals in the past against punishment handed down by the commission, it may be reluctant to do so this time to put the previous acrimony to rest as it focuses on its rivalry with Google. Microsoft is among the companies that have complained about Google’s business practices to the commission.Although Microsoft has lodged court appeals in the past against punishment handed down by the commission, it may be reluctant to do so this time to put the previous acrimony to rest as it focuses on its rivalry with Google. Microsoft is among the companies that have complained about Google’s business practices to the commission.
The commission has been formally investigating Google since November 2010. Mr. Almunia offered the company a settlement in May 2012 after finding that it might have abused its dominance in Internet search and advertising by giving its own products an advantage over those of others while maintaining that it offered neutral results.
Mr. Almunia and Google have been negotiating since then and a final agreement may not be come until later this year, suggesting that the strategy of seeking quick results in antitrust technology cases could be coming undone.
The commission has taken a tougher line with Google than did the U.S. Federal Trade Commission, which decided in January that Google had not broken antitrust laws after a 19-month inquiry. But unlike the F.T.C., Mr. Almunia has insisted that Google make changes to the most sensitive area of its business, online search.
The latest dispute stemmed from the settlement of a case concerning Microsoft’s dominance in Internet browsers — a dominance that the company has relinquished to market forces in recent years.The latest dispute stemmed from the settlement of a case concerning Microsoft’s dominance in Internet browsers — a dominance that the company has relinquished to market forces in recent years.
In Microsoft’s 2009 settlement, the company did not pay a fine but instead committed to installing a system called Browser Choice Screen with Windows. It was intended to offer users alternatives like Google Chrome and Mozilla Firefox to counter the strength of Internet Explorer, Microsoft’s own browser product. The choice must be offered for five years, according to the agreement.In Microsoft’s 2009 settlement, the company did not pay a fine but instead committed to installing a system called Browser Choice Screen with Windows. It was intended to offer users alternatives like Google Chrome and Mozilla Firefox to counter the strength of Internet Explorer, Microsoft’s own browser product. The choice must be offered for five years, according to the agreement.
Millions of European users of the Windows 7 SP1 version of the software may not have been offered a choice of browsers between February 2011 and July 2012, Mr. Almunia said.Millions of European users of the Windows 7 SP1 version of the software may not have been offered a choice of browsers between February 2011 and July 2012, Mr. Almunia said.
The company said it only learned of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers.The company said it only learned of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers.