Microsoft legal chief vows to appeal €280.5m Commission fine

The European Commission has fined Microsoft $280.5m (£193.47m) for failing to comply with its 2004 antitrust ruling, which found the computer software giant in breach of competition rules.

European Competition Commissioner Neelie Kroes maintained a hard stance with Microsoft. “Microsoft has still not put an end to its illegal conduct. I have no alternative but to levy penalty payments for this continued non- compliance. No company is above the law,” she said.

In response, Microsoft general counsel Brad Smith stated his intention to appeal the fine, saying the company has been hindered by a lack of clarity from the Commission.

At a news conference, Smith said: “In our view this issue has never been about compliance, it’s about clarity.”

Backing up the tough talk was a strong legal stance on the Commission’s behaviour. Smith said Microsoft would appeal the fine within the two-month, 10-day deadline once the company receives the formal judgment.

Smith said there were three grounds for appeal. “The first would be that, before the governmental authority imposes a fine on someone for failing to do something, they have an obligation to be clear about what it is they want done, and that this decision did not have the kind of clarity that would justify this type of fine,” he said.

Smith added that the original December 2004 antitrust judgment used only five words to describe compliance: “Complete and accurate technical specifications.”

Second, he said licensees of Microsoft technology had been happy about the documentation, and third that the company had done everything the Commission had asked, and within the deadlines.

Smith said: “Every time we’ve been asked to do something, we’ve done it. We didn’t need a fine to get us to agree to do things.”

But despite appearances, the fine and threats of appeal say little about the present situation.

Relations between the Commission and Microsoft actually show some signs of softening, even leading to hopes for future reconciliation.

It is important to note that the €280.5m fine is the lump sum equivalent to daily fines of €1.5m (£1.03m) since 14 December 2005, the date of the Commission’s final compliance warning.

As a result, it represents a delayed reaction from that date and also from the original 2004 judgment, which Microsoft claims is unclear.

In April this year the Commission’s technical trustee Neil Barratt agreed Microsoft’s plan to reveal more information about its products and provide the regulators with improved documentation.

Kroes referred to this in her statement about the fine, ending on an optimistic note: “I sincerely hope that the latest technical documentation being delivered by Microsoft will finally bring them into compliance and that further penalty payments will not prove necessary.”

The company says it has around 300 engineers working full time on the process and is on time to hit the Commission’s 24 July deadline for the documentation. The project will even come in with a few days to spare, which could improve relations between the two.

The Commission’s decision to fine Microsoft just a few weeks before the 24 July deadline has frustrated the company, but should not affect its delivery of the documentation.

Smith said: “Obviously we disagree about the past two years, but we’re encouraged by the Commission’s comments that our recent work is ‘extremely good’.”

Better relations between Microsoft and the Commission, resulting from the push to produce better documentation, will help them both find the clarity that has been lacking from the beginning.

Microsoft’s hope is that the delayed reaction from its new compliance plan will be agreement rather than further fines.