Microsoft Appeals $1.3 Billion EC Penalty

Microsoft on Tuesday appealed an 899-million-euro ($1.3 billion) penalty stemming from a 2004 Windows antitrust action.

A $1.3-billion "periodic penalty payment" was slapped on Microsoft in 2008 by the European Commission (EC) for noncompliance. Microsoft had failed to provide technical documentation enabling Windows interoperability, and had failed to offer that documentation to competitors on nondiscriminatory terms, according to an EC Journal account (PDF).

Microsoft was subject to a number of fines and penalties, but it achieved infamy at the EC by being the first company to be assessed with two periodic penalties, according to a comment by EC's competition commissioner. The penalty Microsoft is contesting spans the time between June 21, 2006 and Oct. 21, 2007.

Microsoft's legal counsel is seeking to "annul or reduce the amount" of the penalty in the case, which is known as T-167/08. The appeal was argued before the European Union's General Court on Tuesday, according to Reuters. Microsoft is claiming that the EC failed to tell Microsoft what the reasonable price terms should be, among other matters.

The case has its roots in 1998, when Sun Microsystems lodged a complaint with the EC over Microsoft's market dominance with the Windows operating system, according to a chronology compiled by Free Software Foundation Europe, which is siding with the EC. The court eventually found that Microsoft had violated Europe's competition laws in the workgroup server OS and media player markets.

Free Software Foundation Europe plans to argue that "protocols and interoperability information have no intrinsic value, but Microsoft kept them secret so it could squelch rivals in the work group server market," according to an announcement. Others siding against Microsoft include the European Committee for Interoperable Systems, along with its members IBM, Oracle Corp. and Red Hat. A list of those involved in both sides of the appeal is published here by the Law360 Web site.

A decision from the General Court can take a year, but Microsoft can subsequently appeal to the EU Court of Justice if it wants, according to the Reuters' account.

Earlier this month, Microsoft was released from U.S. Department of Justice scrutiny over its documentation process. The company initiated a broad open API and interoperability documentation effort back in February 2008, which was likely spurred by government antitrust actions.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.


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