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Wednesday, July 12, 2006
Microsoft to Appeal Huge EU Fine

Microsoft said it would appeal the €280 million ($357 million) fine handed down by the European Commission to the software giant for failing to comply with an antitrust ruling two years ago.

The Commission also threatened further penalties Wednesday (July 12), including fines of $3.82 million a day beginning July 31, unless the company supplies "complete and accurate" technical information to developers to help them make software that works smoothly with its Windows operating system.

"Microsoft has still not put an end to its illegal conduct. I have no alternative but to levy penalty payments for this continued non-compliance,'' Neelie Kroes, Competition Commissioner, said in a statement.

Justifying her decision, she added: "I don't buy Microsoft's line that they didn't know what was being asked of them, because the March 2004 decision is crystal clear."

However, she said the company was now finally acting constructively, although it was still some way short of compliance.

Microsoft General Counsel Brad Smith responded insisting the company would ask the courts if the "unprecedented" fine was justified.

"We have great respect for the Commission and this process, but we do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission's original decision and our good-faith efforts over the past two years," he said in a statement.

The EU had already levied a record Euros 497 million ($613 million) fine on Microsoft in 2004 and ordered it to hand over communications code to rivals, saying it had deliberately tried to cripple them as it won control of the market.

At the core of the conflict is the Commission's accusation that Microsoft had not drawn up "complete and accurate" information on the Windows operating system, which a ruling by the EC required Microsoft to share with rival software developers. The company has been arguing since December 2004 that it had done everything the ruling demanded, but both the software group's rivals, and the Commission dispute this.

To break the deadlock Microsoft and a technical advisor appointed by the EC, Professor Neil Barrett, agreed on a seven-step work plan detailing what the company had to do and by when.

Kroes was unrepentant, saying the independent monitor appointed to supervise Microsoft's revision of the documents had reported that only half of 70 documents were in a fit state. When the EU made its decision on June 20, only one was suitable, he had told her.

"I sincerely hope that the latest technical documentation being delivered by Microsoft will bring them into compliance and that further penalty payments will not prove necessary," she said.

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