On February 27, 2008, the European Commission ordered Microsoft to pay a record €899-million penalty for failing to implement remedial measures imposed in 2004 to address conduct that the Commission had found to be an abuse of dominant position. The penalty is the latest and last battle in a decade-long war between the Commission and Microsoft over the Windows operating system and Media Player. The €899-million penalty brings the total fines imposed on Microsoft by the Commission to €1.68 billion.
McCarthy Tétrault Notes:
In 2004, following a five-year investigation, the European Commission found that Microsoft had abused its dominant position in the PC operating system market by (i) refusing to supply competitors with information necessary for their products to operate with Windows, and (ii) tying Media Player with the Windows operating system. In addition to ordering Microsoft to supply interoperability information to competitors and to cease tying Media Player to Windows, the Commission ordered Microsoft to pay a fine of €497 million. At the time, it was the largest penalty ever imposed.
Microsoft challenged the Commission's decision before the European Court of First Instance (CFI) and requested an order suspending the Commission's remedies until the challenge had been determined. Microsoft argued that the decision was contrary to its intellectual property rights, undermined innovation and interfered with its commercial interests. It also contended that the penalty and remedies would cause irreparable harm.
In December 2004, the CFI rejected Microsoft's request to suspend the remedies, pending determination of Microsoft's challenge, because Microsoft had not demonstrated that the remedies would cause serious and irreparable harm. The CFI issued its decision on Microsoft's challenge in September 2007. The CFI's reasons largely upheld the Commission's 2004 findings.
Between December 2004 and the CFI's decision in September 2007, the Commission monitored Microsoft's implementation of the remedies imposed in 2004. In March 2007, the Commission objected to the measures implemented by Microsoft to comply with the Commission's decision. Microsoft was obliged, under the order, to provide the complete and accurate interoperability information on reasonable terms. The Commission alleged that Microsoft had not provided complete and accurate information and was charging too much money to competitors for the information. The Commission warned that Microsoft could be fined up to €3 million per day for every day that Microsoft was not in compliance with the 2004 decision.
After the release of the CFI's decision in September 2007, Microsoft began offering interoperability information to competitors at a lower price. The €899-million penalty was for non-compliance from 2004 to fall 2007. It is interesting to note that the penalty for Microsoft's abuse of dominant position far exceeds penalties imposed by the Commission for price-fixing agreements, regarded by many as the most egregious form of anti-competitive conduct.
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