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
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
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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