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IP/06/979

Brussels, 12th July 2006

Competition: Commission imposes penalty payment of €280.5 million on Microsoft for continued non-compliance with March 2004 Decision

The European Commission has imposed a penalty payment of €280.5 million on Microsoft for its continued non-compliance with some of its obligations under the Commission’s March 2004 Decision (see IP/04/382). That Decision found that Microsoft had abused its dominant position under Article 82 EC, and required Microsoft to disclose complete and accurate interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers. Today’s Decision, adopted under Article 24(2) of Regulation 1/2003, finds that Microsoft has not fulfilled this obligation. Should Microsoft continue to fail to comply, the Decision also increases the amount of the daily penalty payment to which Microsoft could be subject to €3 million per day.

“The Commission is obliged to ensure compliance with EU law, and I have always underlined my determination to ensure that Microsoft fully implements the Commission’s March 2004 Decision”, said European Competition Commissioner Neelie Kroes. “I regret that, more than two years after the Decision, and despite an Order from the President of the Court of First Instance that the Microsoft appeal to the Court does not suspend Microsoft’s obligation to comply, 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. No company is above the law. Any businesses operating in the EU must obey EU law I sincerely hope that the latest technical documentation being delivered by Microsoft will finally bring them into compliance and that further penalty payments will not prove necessary”.

The Commission’s Decision of March 2004 requires Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems. Following the rejection of Microsoft’s application for suspension of this requirement by the President of the Court of First Instance in December 2004 (see MEMO/04/305), the Commission expressed concerns to Microsoft that the interoperability information it had provided was not complete and accurate. On November 10 2005, the Commission warned Microsoft that were it not to comply with its obligation as from December 15 2005 to: (1) supply complete and accurate interoperability information; and (2) make that information available on reasonable terms, it would face daily penalty payments of up to €2 million per day for continued non-compliance.

Today’s Decision concludes that as of 20 June 2006, Microsoft had still not supplied complete and accurate interoperability information as required by the March 2004 Decision. Microsoft’s obligations in this regard are clearly outlined in that Decision, both in terms of the result to be achieved, and in terms of what Microsoft must do to achieve that result. These obligations were specific and have not changed: it is for Microsoft to produce usable documentation.

The Commission has based its conclusion on the advice of: (i) the Monitoring Trustee, who gives technical assistance to the Commission as regards Microsoft’s compliance with the Decision (see IP/05/1215); and (ii) the Commission’s external technical advisors, TAEUS. From the outset of the procedure, Microsoft has had full access to all the reports on which the Commission’s conclusions are based.

Of the two elements of non-compliance identified on 10 November 2005, the provision of complete and accurate interoperability information is a prerequisite for interoperable work group server operating systems to be developed. Microsoft’s non-compliance in this regard has eliminated the effectiveness of the remedy. Consequently, the Commission has taken the view that Microsoft’s failure to comply in this respect should constitute a larger part of the daily penalty payment of €2 million. Today’s Decision therefore imposes a daily penalty payment of €1.5 million for this element of non-compliance.

Today’s Decision also includes a provision pursuant to Article 24(1) of Regulation 1/2003 specifying that if Microsoft fails to comply either with its obligation to provide complete and accurate interoperability information or to make that information available on reasonable terms, the level of daily penalty payment to which it would be potentially liable would rise to €3 million as of 31 July 2006. The imposition of a further penalty payment for non-compliance would require a new Commission Decision.
Further information and background on this case, see MEMO/06/277 and the Europa website:

http://ec.europa.eu/competition/antitrust/cases/microsoft/index.html


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