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Software // Enterprise Applications

Microsoft Rails Against Proposed European Fine

Microsoft says the amount appears to have been doubled from what it would have been under the European Commission's own guidelines.

BRUSSELS, Belgium (AP) -- Microsoft Corp. accused the European Union Tuesday of going too far in seeking a record fine of about $615 million against it for alleged antitrust abuses, saying it was being penalized for behavior permitted in the United States.

The Redmond, Wash., software giant's chief European lawyer, Horacio Gutierrez, said the amount appeared to have been doubled from what it would have been under the European Commission's own guidelines to account for the company's global operations.

Microsoft does about 30% of its business in Europe.

"We believe it's unprecedented and inappropriate for the Commission to impose a fine on a company's U.S. operations when those operations are already regulated by the U.S. government," Gutierrez said. "The conduct at issue has been permitted by both the U.S. Department of Justice and a U.S. court."

The European Commission is to issue its ruling against Microsoft, including the fine, on Wednesday. The EU's executive body has declined to confirm the amount of the proposed fine, or comment on Microsoft's complaints.

Sources familiar with the 5-year-old case say the EU ruling finds Microsoft abused its Windows monopoly, harming consumers and competitors in the markets for digital media and server software.

Microsoft settled an antitrust case in late 2001 with the Bush administration. A U.S. appeals court is currently considering whether that landmark deal was adequate to restore competition.

Representatives from the 15 European Union governments met Monday behind closed doors to approve the level of the fine proposed by EU Competition Commissioner Mario Monti. A source familiar with the case said it was about $615 million.

That would be a record for the EU in an antitrust case, but far below the maximum of around $3.5 billion that could be imposed in Microsoft's case.

Microsoft has cash reserves in excess of $50 billion, and analysts say the fine is less significant than the changes Monti is seeking in how the company sells Windows, which runs most personal computers worldwide.

The EU is expected to order Microsoft to release more of the underlying code for Windows to rivals in the server market, and deliver a version of Windows without its Windows Media Player software in Europe to help competing products reach desktops.

Microsoft has promised to appeal any negative decision.

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