EU Officials Back Fine Against Microsoft

It's not known how big the fine will be. Antitrust violators can be fined 10% of their global revenue.
BRUSSELS, Belgium (AP) -- European Union antitrust officials won backing Monday for a reportedly record-setting fine against Microsoft Corp., the last hurdle before adopting a decision that could also force far-reaching changes in how the U.S. software company sells Windows.

Representatives from the 15 EU governments met for less than an hour behind closed doors to review the fine proposed by EU Competition Commissioner Mario Monti. A source familiar with the case, but speaking on condition of anonymity, told The Associated Press they agreed to it but declined to elaborate.

Other sources, also speaking on condition they not be identified, estimated the fine would run into the hundreds of millions of dollars when the European Commission, the EU's executive body, issues its ruling Wednesday.

Dow Jones Newswires and German business daily Handelsblatt, both citing an unidentified sources familiar with the matter, reported the fine would be about 500 million euros ($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. The Redmond, Wash.-based company has cash reserves in excess of $50 billion.

Commission spokeswoman Amelia Torres refused to comment on the meeting or the reports.

EU rules allow the Commission to fine antitrust violators as much as 10 percent of annual global revenue. In practice they have been far lower. The largest ever imposed was less than 2 percent--462 million euros ($568 million)--against Roche Holding AG, one of several companies caught fixing the prices of bulk vitamins in 2001.

The record penalty for charges similar to those Microsoft faces--abusing a monopoly position--is 75 million euros ($92 million) imposed on Swedish packaging giant Tetra Pak AB in 1991.

Monday's meeting came a week after the same advisory panel unanimously backed Monti's draft ruling, which sources familiar with the 5-year-old case say finds Microsoft abused its Windows monopoly, harming consumers and competitors in the markets for digital media and server software.

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.

The EU is expected to require Microsoft to make the stripped-down version available at some kind of discount, although analysts say any order that smacks of price-setting would be vulnerable to a court challenge.

"That's something that all regulators strive to avoid," said David Smith, an analyst at research firm Gartner Inc.

Attempts at a settlement failed last week over Microsoft's reluctance to accept provisions that could have prevented it from adding features to future versions of Windows--a key element of its strategy for selling upgrades.

Monti has indicated he wants a legally binding precedent that can be used to wrap up other cases still pending against Microsoft and possibly help ward off more.

The EU is already looking into charges from Microsoft competitors that its latest desktop operating system, Windows XP, is designed to help extend Microsoft's dominance into new markets such as instant messaging and mobile phones.

And Microsoft's next version of Windows, due in 2006, is expected to include a Web search engine that would challenge Google and Yahoo.

The impact of the EU decision could be delayed for years if Microsoft wins an emergency suspension from the courts pending its promised appeal.

But analysts say it could indirectly hurt Microsoft's attempts to counter the open-source Linux operating system, which is poised to become a strong competitor to Windows in Asia, especially in the government sector.

"Microsoft has been trying to improve relationships with governments worldwide and an adverse ruling in the EU could hamper those efforts," said Joe Wilcox, senior analyst with Jupiter Research.

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