Microsoft: EU fine was "excessive and disproportionate"

 

Gallery

Posted on 8 Jul 2008 at 07:54

Microsoft has told a European Union court that an antitrust fine of €899 million ($1.4 billion) against it is both excessive and disproportionate.

In February, the European Commission found that Microsoft used high prices to discourage competition, and failed to carry out sanctions imposed against it as part of a long-running case. Microsoft is appealing against the fine imposed in February.

"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 licence... were unreasonable," the court said in summarising 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," he 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 and the Commission had agreed to have a trustee review the rates if need be, in a mechanism that had been used in another case, Microsoft argued.

The Commission's yardstick for determining whether Microsoft's trade secrets were innovative was also erroneous, ignoring many arguments prepared by patent experts, the company said.

"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 adds.

The Commission has said it imposed the fine because the US 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 by the EU for abusing its 95% dominance of PC operating systems. The €899 million fine was the biggest ever imposed on a company by the EU executive.

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

Microsoft unsuccessfully appealed against that penalty and was also later fined €280.5 million by the Commission for non-compliance.