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Neelie Kroes

European Commissioner for Competition Policy

Decision to impose € 899 million penalty on Microsoft for non-compliance

Introductory remarks at press conference
Brussels, 27th February 2008

Today the European Commission has imposed a substantial fine – to be precise € 899 million – on Microsoft for its non-compliance up until 22 October 2007 with its obligations under the Commission’s March 2004 Decision to provide interoperability information on reasonable terms.

Today's decision finds that, prior to 22 October 2007 Microsoft charged unreasonable prices for access to indispensable interoperability information.

In plain English this is to say that Microsoft continued to abuse its powerful market position after the Commission's March 2004 decision requiring it to change its practices. Microsoft continued to stifle innovation by charging other companies prohibitive royalty rates for the essential information they needed to offer software products to computer users around the world. Charging such an unreasonable price effectively rendered the offer of the information pointless.

Microsoft's behaviour did not just harm a few individuals or a handful of big companies ... directly and indirectly this had negative effects on millions of offices in companies and governments around the world.

It gives me no pleasure to be here again announcing such a fine; nor to see that a company flouted the law when it had many opportunities to choose other courses of action. But given the nature of Microsoft's non-compliance – considering both its effects and its duration, today’s fine is proportionate and necessary.

There are lessons that I hope Microsoft, and any other company contemplating similar illegal action, will learn.

Talk is cheap; flouting the rules is expensive.

We don't want talk and promises - we want compliance.

If you flout the rules you will be caught, and it will cost you dear.

This is the third time in four years that we have had to impose fines or penalty payments on Microsoft.

The first fine was for the abuse itself – everything up until March 2004.

Then the Commission had to impose a penalty payment in July 2006 for non-delivery of complete and accurate interoperability information. That was the first time that a penalty payment for non-compliance with a Commission decision had been necessary in fifty years of EC Competition Law. 

And finally today's penalty payment for unreasonable royalty rates up until October 2007. That the Commission has been forced to levy these three fines reflects a clear disregard by Microsoft of its legal obligations.

The Commission’s fine is a reasonable response to a series of quite unreasonable actions.

Microsoft has gone from insisting on charging a 2.98% royalty for non-patented interoperability information to charging a flat fee of €10 000 for the same information.

Finally, after three years of illegal behaviour, it appears that Microsoft has come into compliance with the 2004 decision.

Today's decision and penalty payment are about the 2004 Decision only, and are not about any of Microsoft's other business practices.

I must stress that distinction in the clearest possible terms.

You will, of course, be aware that the Commission opened two antitrust inquiries in January looking at several of Microsoft's other practices. One concerns interoperability information across a broad range of products, including Microsoft's Office suite and a number of its server products. The other concerns tying of Internet Exporer and other separate software products with the Microsoft PC operating system.

These investigations are separate and continuing – I can offer no comment until the investigation is complete.

As always, we will take into account any changes that Microsoft makes to its business practices that are relevant to those investigations.

We take positive changes to business practices very seriously.

But again, I stress that a press release, such as that issued by Microsoft last week on interoperability principles does not necessarily equal a change in a business practice.

If change is needed – and as I say, I have reached no conclusion on that – then the change will need to be on the market. Not in the rhetoric.

To finish I think it is important to share a little insight into our consistent approach to illegal behaviour.

It’s not my job to tell people or companies what to buy ... but it is my job to ensure they have a choice about what they can buy.

Competition policy is about making sure that people and companies have the right to choose.

And when people and companies are given that right to choose, then markets deliver so much more – this is why I am passionate about making markets work better.

Today's decision sends a strong signal that consumers can expect choice in Europe, and can expect the European Commission to fight for their right to choose.

Thank you.

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