Microsoft appeals against record EU anti-trust fine

by Sophie Estienne Fri May 9, 1:42 PM ET

BRUSSELS (AFP) - Microsoft on Friday lodged an appeal at a European court against a record 899 million euro (1.39 billion dollar) fine imposed on it by the EU Commission for defying a landmark anti-trust ruling.

"Microsoft today filed with the Court of First Instance an application to annul the Commission decision of February 27," the spokesman for the US software giant said in Brussels.

"We are filing this appeal in a constructive effort to seek clarity from the court," in Luxembourg, he added.

A European Commission spokesman voiced confidence that the grounds for the fine were sound.

"The Commission is confident that the decision to impose the fine is legally founded," said Jonathan Todd, spokesman for EU Competition Commissioner Neelie Kroes.

EU competition regulators imposed the record fine in February after deeming that the US software giant had defied a 2004 ruling.

After a five-year investigation, the commission had ruled then that Microsoft abused its share of the market for operating systems running personal computers thanks to its ubiquitous Windows programme.

Microsoft fought the decision tooth-and-nail until last September when an EU court threw out the company's appeal against the ruling, significantly strengthening the commission's hand in the long-running standoff.

The European Commission, Europe's top competition watchdog, originally fined Microsoft 497 million euros in March 2004 and ordered the company to open some key software to rivals so they could make compatible products.

In particular, it accused Microsoft of using its stranglehold on PC operating systems to elbow rivals out of the more competitive markets for media players that play music and videos, and operating systems running back-office servers.

In July 2006, the commission fined the company a further 280 million euros after determining that it was not respecting its original ruling.

The commission then hit Microsoft with the latest penalty of 899 million euros -- the sum of daily fines running from June 21, 2006 to October 21, 2007 -- because it said the company had failed to charge rivals reasonable prices for access to key information about its work-group or back-office servers in contravention of the original 2004 ruling.

The 899 million euro fine is the biggest ever levelled against a single company in an EU antitrust case and brings the total penalties against Microsoft to just below 1.7 billion euros.

At the same time, Microsoft is also facing a new, separate EU challenge.

Since its court victory last year, the European Commission has launched a new investigation targeting the inter-operability of a broad range of software, including Microsoft's popular Office package, with rival products.

In February, Microsoft said it was making "broad-reaching changes" to its technology and business practices to enhance the ease with which its software interacts with partners, customers and competitors.

However the commission gave the move only a lukewarm response, saying that it had seen similar promises from Microsoft in the past.