Microsoft Blasts EU Court Fine

Microsoft in the courts

BRUSSELS — Microsoft has told a European Union court that an antitrust fine of 899 million euros ($1.4 billion) against it is both excessive and disproportionate, the EU’s Court of First Instance said on Monday.

On Feb. 27, the EU’s European Commission imposed a fine after finding that Microsoft (NASDAQ: MSFT) used high prices to discourage competition and failed to carry out earlier sanctions imposed against it as part of a long-running case. Microsoft appealed the fine in May.

Microsoft’s response comes as its latest move to reverse its sliding fortunes in the EU’s courts and legislature, on the heels of setbacks that include a lawmaker’s call to ban it from government sales in member countries. Last month, Microsoft hired a “legal czar” to oversee its efforts in the region — efforts that this month resulted in fresh criticism for its newest fine.

“The Commission failed to take due account of the fact that the contested decision only concludes that the royalties allegedly established by Microsoft under one particular license … were unreasonable,” the court said in summarizing Microsoft’s arguments, published in the EU’s Official Journal.

A Commission spokesman disagreed.

“The Commission is confident that its decision to impose the fine was legally sound,” Jonathan Todd said.

The company argued that the Commission made a “manifest error” by labeling its rates as unreasonable without considering that they were “intended to facilitate negotiations between Microsoft and the prospective licensees.”

In addition, Microsoft argued that the Commission had agreed to have a trustee review the rates if need be, in a mechanism that had been used in another case.

The company also said Commission erred by the yardstick that it used in requiring Microsoft to establish its trade secrets were innovative, ignoring many arguments prepared by patent experts.

“The Commission also denied Microsoft’s right to be heard,” because it failed to give the company a chance to give its views at the end of the period for which it was fined, Microsoft said.

The European Commission has said it imposed the fine because the U.S. software group had defied a 2004 order from Brussels to provide information to competitors on reasonable terms.

Microsoft has been fined a total of 1.68 billion euros by the EU for abusing its 95 percent dominance of PC operating systems through its Windows operating system.

The 899 million-euro fine was the biggest ever imposed on a company by the EU executive.

The Commission initially fined Microsoft 497 million euros in March 2004 for withholding interoperability information for workgroup server software and for deliberately damaging rivals by tying its Windows Media Player to its Windows system.

Microsoft unsuccessfully appealed against that penalty and was also later fined 280.5 million euros by the Commission for noncompliance.

The latest fine picked up from where the 280.5 million euro penalty left off, covering the period from June 21, 2006, until Oct. 21, 2007.

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