Microsoft Fined $730m for Breaching EU Anti-trust Agreement
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The European Commission on Wednesday fined U.S. giant Microsoft 561 million euros ($732 million) for failing to provide consumers with a choice of Internet browser, as it had promised to do.
EU Competition Commissioner Joaquin Almunia said this is the first time a company has been punished for failing to meet its obligations, making it a “very serious infringement.”
The European Commission on Wednesday fined U.S. giant Microsoft 561 million euros ($732 million) for failing to provide consumers with a choice of Internet browser, as it had promised to do.
EU Competition Commissioner Joaquin Almunia said this is the first time a company has been punished for failing to meet its obligations, making it a “very serious infringement.”
Microsoft, a leading U.S. software company, had broken a legally binding commitment made in 2009 to ensure that consumers had a choice through 2014 of how they access the Internet, rather than defaulting to Microsoft’s own Internet Explorer.
However, an investigation found that Microsoft had failed to honour that obligation between May 2011 and July 2012, depriving some 15 million users of a choice.
Asked at a press conference yesterday why the Commission had not picked up the problem at the time, Almunia said that it had been “naive” to put Microsoft itself in charge of monitoring its own compliance.
“Legally binding commitments reached in anti-trust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems,” Almunia said in a statement. “Such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly.”
Microsoft said it took full responsibility for the incident, which it has blamed on a technical error. The board cut chief executive Steve Ballmer’s bonus last year partly as a result, and also faulted former Windows head Steven Sinofsky who left the company last year for unrelated reasons.
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Under European law, a company found to have breached commitments made to resolve competition cases can be fined up to 10 percent of annual revenues. While sizeable, Microsoft’s sanction represents only 1 percent of the company’s annual sales in 2012.
In calculating the fines, the Commission said it had taken into account that Microsoft had cooperated by providing information that helped speed up the investigation.
“I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance,” Almunia said.
Microsoft has already paid about 1.6 billion euros in fines through its decade-long feud with Brussels. The EU imposed its first fine of 497 million euros on Microsoft on competition grounds in 2004. In 2008, it had pay to 899 million euros in 2008, subsequently reduced to 860 million, for failing to comply with an order to share product information with rivals so that their software could work with Windows.
Wednesday’s ruling will be studied carefully by the likes of Google, which is involved in a dispute with the Commission over how it ranks search engine results. Critics say Google controls about 70 percent of the Internet search market, and the advertising that goes with it.
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