EC hits Microsoft with record fine
Company to pay $1.35 billion
"Microsoft was the first company in 50 years of European Union competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said European competition commissioner Neelie Kroesin a statement on Wednesday. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision."
In separate legal action related to Microsoft, Yahoo is facing seven shareholder lawsuits alleging the slumping Internet pioneer bungled its response to Microsoft's unsolicited takeover bid.
The European Commission's original ruling found Microsoft guilty of anti-competitive behavior for failing to disclose complete and accurate inter-operability information to rival developers of "work group operating systems."
The ruling called on the company to disclose interface documentation, which would allow non-Microsoft work group servers to achieve full inter-operability with Windows PCs and servers at a reasonable price.
Initially Microsoft had been demanding a royalty rate of 3.87% of a licensee's product revenues for a patent license, and a rate of 2.98% for a license giving access to inter-operability information.
Microsoft was also fined what was then a record $748 million.
This was followed by a further $422 million fine in July 2006 for failing to comply with the sanctions.
The latest fine covers the period from the 2006 penalty through to October, when Microsoft finally agreed to comply with the EU demands after its appeal against the 2004 ruling was rejected by a European court in September.
On Oct. 22, Microsoft announced it would provide an inter-operability information license for a flat flee of $15,000 and an optional worldwide patent license for a reduced royalty rate of 0.4% of a licensee's product revenues.
"We are reviewing the Commission's action," said a Microsoft rep. "The Commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved. As we demonstrated last week with our new inter-operability principles and specific actions to increase the openness of our products, we are trying to focus on steps that will improve things for the future."
Last week, Microsoft also announced it would be making its software, including Windows, easier to operate alongside other companies' products.
There may be further trouble ahead for Microsoft, however.
In January, the European Commission announced a further two probes into Microsoft anti-competitive behavior, this time focusing on allegations that the company has used its dominant Office software suite unfairly and illegally tied its own Internet browser to its Windows operating system.
Sunnyvale-based Yahoo provided a breakdown of the lawsuits in an annual report filed Wednesday with the Securities and Exchange Commission.
Yahoo's board believes Microsoft's offer, originally valued at $44.6 billion, is insufficient. Microsoft, though, has stood firm and is now preparing to overthrow Yahoo's 10-member board, which includes the company's co-founder and chief executive, Jerry Yang.
Microsoft faces a March 14 deadline to nominate an alternate slate of directors.
The impasse has triggered four shareholder suits in California's Santa Clara County Superior Court. Three other complaints have been filed in Delaware by pension funds that own Yahoo's stock.
Five of the suits allege Yahoo's board breached its duty by spurning Microsoft without trying to negotiate a better deal, according to the annual report. The two other suits allege Yahoo unfairly favored Microsoft's "inadequate'' bid even though the board eventually turned down the original cash-and-stock offer of $31 per share.
