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Microsoft Hit With 280m Euro Fine 527

Craig Mason writes "The BBC Reports that "Microsoft has been fined 280.5m euros ($357m; £194m) by the European Commission for failing to comply with an anti-competition ruling. The software giant was hit by the fine following a long-running dispute between the US firm and EU regulators. The move follows a landmark EU ruling in 2004, which ordered Microsoft to provide rivals with information about its Windows operating system. EU regulators also warned Microsoft it could face new fines of 3m euros a day.""
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Microsoft Hit With 280m Euro Fine

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  • WOW! but.... (Score:3, Insightful)

    by i_want_you_to_throw_ ( 559379 ) on Wednesday July 12, 2006 @08:41AM (#15704437) Journal
    MSFT has a market cap of 230-something billion [yahoo.com]. Substantial? Not really.
    • Re:WOW! but.... (Score:3, Interesting)

      by ThePilgrim ( 456341 )
      True but the EU has allready started to ratchet up the fine.

      If MS arn't in complience by the end of the month then the fine goes up another .5M euros.

      The EU can start bumping up the fine as high as it wants now it has aggrement with the member states.
      • Re:WOW! but.... (Score:3, Informative)

        by arivanov ( 12034 )
        The fine is as per old fine rules which caps it at 10% of annual turnover per year of misconduct which will be unpleasant for Microsoft, but can be sustained for a very long time. Even the disobedience fine is only 50% of the period of breaking the rules after the ruling which is painfull, but not lethal.

        Unfortunately the commission cannot apply the new rules which set a cap for the fine at 30% of backdated turnover and 100% of turnover past the violation. Now that level of fine would simply put any company
    • Re:WOW! but.... (Score:5, Interesting)

      by oh_my_080980980 ( 773867 ) on Wednesday July 12, 2006 @08:46AM (#15704466)
      I think the important point here is that the EU fined Microsoft and did not cave to pressure from the United States and interested third parties. There's no appealing this one. God bless the EU!

      Now the question is will Microsoft comply?

    • Re:WOW! but.... (Score:5, Informative)

      by Red Flayer ( 890720 ) on Wednesday July 12, 2006 @09:01AM (#15704560) Journal
      Market cap is not the important figure here, since that doesn't represent the actual capital that MSFT has on hand, but rather the market valuation of their shares. It's the income statement [yahoo.com] you want to look at.

      For the FY ending 6/30/05, MSFT had a net income of US$ 12.2 billion. So, a fine of US $357 million IS significant -- it's roughly 3% of their net income.
      • Re:WOW! but.... (Score:5, Insightful)

        by TheRaven64 ( 641858 ) on Wednesday July 12, 2006 @09:06AM (#15704601) Journal
        It's still less than they ended up paying Eolas for patent infringement, however.
      • Re:WOW! but.... (Score:4, Informative)

        by hey! ( 33014 ) on Wednesday July 12, 2006 @09:46AM (#15704860) Homepage Journal
        You're right that Market Cap is not the right thing to look at, at least in the short term. But income, while important, is not the full picture either.

        What you really want to do is look at the balance sheet and in particular at cash and cash equivalents, which are assets that can readily converted into cash on short notice. Also the cash flow statement. Cash is what determines whether you can meet your short term obligations, such as paying employees and vendors. Cash equals flexiblity and security. If you have cash on hand, you can weather a loss on your income statement. Likewise if you have healthy income, but it's in assets that cannot be liquidated, you can end up with a healthy income yet not be able to pay bills. Income is like food; if you don't have it, you're going to have to curtail your activities soon. Cash is like air: if you don't have it, you're dead right now.

        I once worked for a company that lost money for seven years straight. But it paradoxically grew all those years, in fact it continually lost money because it was plowing all its income into producing growth. The key was that the business genreated cash, and they could always pay last quarter's creditors out of this quarter's cash flow. The trick is to engineer a soft landing, because soon or later cash flow growth is going to falter, and the income statement buzzards will be roosting on your dying cash carcass.

        I haven't followed Microsoft closely in recent years, but historically MS is a business that generates loads of cash. Last time I looked, they had something like a billion and a half of cash equivalents on hand, and $350 million would represent something like 5% of their annual operational cash flow (not counting investments). It's enough on the income and cash side to make you sit up and take notice, but not a fatal blow. If they thought they could outmaneuver the EU regulators, they might well tighten their belts for a couple of quarters to end up in a stronger position later.
        • Re:WOW! but.... (Score:4, Interesting)

          by Red Flayer ( 890720 ) on Wednesday July 12, 2006 @10:13AM (#15705052) Journal
          FYI, I'm an accountant.

          Whether or not MSFT can pay the fine out of cash is moot (though they can), my point was that the significance of the fine is better explained in terms of the income statement than their market cap.

          As to your example of a growing company continually operating at a loss in order to self-finance growth capital... being cash positive is important (crucial even). But this business model is fatally flawed... the question is not if that company will go bust, it is when. It's like a Ponzi scheme -- you're dependent on growth to meet your cash requirements. 'Engineering a soft landing' -- do you mean changing allocation of cash from growth investment to paying down debt?
    • by Flying pig ( 925874 ) on Wednesday July 12, 2006 @09:07AM (#15704609)
      Market capitalisation is a joke number, meaningful only to people who do not understand the most basic economic laws. At any time only a small percentage of a company's shares is traded, and the price reflects the "scarcity value". Market capitalisation is based on the ludicrous idea that the worth of a company = number of shares issued * current trading price.

      In fact, as with any situation where supply is (actually) relatively inelastic, if the supply side suddenly increased the price would drop dramatically. If Bill wanted to sell all his shares on Monday, how much do you think he would get for them? A lot, but nothing like the current price. The shares would be suspended as they started to go into freefall. Goes for houses, goes for Rembrandts, goes for shares. At one time during the Tokyo land price boom, Tokyo was capitalised at more, I believe, than the entire real estate of the US. Would you have swapped the US for metropolitan Tokyo?

      Microsoft's market capitalisation is unimportant and meaningless; what matters is the effect of ongoing fines on their day to day operations, the market perception, and the buying decisions made by large institutions who will be reading all about it in the FT, Handelsblatt etc.

      • Would you have swapped the US for metropolitan Tokyo?

        Well... The japanese are a bit weird... But yes, definetely :P
    • MSFT has a market cap of 230-something billion. Substantial? Not really.

      The EU has telegraphed this fine for a year. It could have easily been avoided. Gates and Ballmer may have a large cash hoard. I doubt if their stockholders appreciate them lighting it on fire.

  • 2 days (Score:3, Interesting)

    by Anonymous Coward on Wednesday July 12, 2006 @08:42AM (#15704438)
    Acording to wikipedia, it will take them 2 days to recover it. Big deal.
  • Worrying thought... (Score:5, Interesting)

    by tygerstripes ( 832644 ) on Wednesday July 12, 2006 @08:43AM (#15704449)
    What happens if they don't pay?
    • Easy (Score:3, Insightful)

      by gentimjs ( 930934 )
      The same thing that happens whenever a big company doesnt pay a fine. Absolutly nothing.
      Since you cant put a corporate entity in jail, and current structures are such that shareholders and executives face few legal penalties for the actions of the corporation (rather than thier own personal actions, such as in the enron ordeal) there's little real incentive for them to actualy pay up.
      • Re:Easy (Score:5, Interesting)

        by tygerstripes ( 832644 ) on Wednesday July 12, 2006 @08:52AM (#15704503)
        This is my point. What would be the consequences of such inaction? Basically, the EU is seen to be powerless against mega-corporations. The law is subject to corporations, not the other way around. M$ would be perceived as above the law in the EU! Big, big trouble...

        The only way the EU could actually enforce this would be to threaten, essentially, trade sanctions. But how heavily is the government, industrial and home market of every EU country saturated with M$ products? So they can't even impose anything worth a damn without incurring massively detrimental consequences themselves.

        Think this through, seriously. It's frightening.
        • Re:Easy (Score:4, Funny)

          by oneandoneis2 ( 777721 ) * on Wednesday July 12, 2006 @08:59AM (#15704545) Homepage
          Stopping MS selling anything new in Europe wouldn't disable any of the current MS installations - They could sanction MS without hurting themselves much.

          I think it'd be more poetic if they just revoked MS's copyrights and declared Windows "freeware", tho - chairs would wind up hurled into orbit when that one got announced ;o)
        • Re:Easy (Score:3, Interesting)

          by mrchaotica ( 681592 ) *

          But how heavily is the government, industrial and home market of every EU country saturated with M$ products? So they can't even impose anything worth a damn without incurring massively detrimental consequences themselves.

          You know, the only thing that allows Microsoft to sell software in the EU to begin with is the fact that the EU enforces their copyright for them. The easiest thing would be for the EU to declare that all of Microsoft's products are Public Domain -- then they can keep using it all they wan

        • Re:Easy (Score:3, Insightful)

          by fireboy1919 ( 257783 )
          The only way the EU could actually enforce this would be to threaten, essentially, trade sanctions.

          This just isn't true. It's much easier to seize assets of a large corporation than it is for an individual. They can just take the money.

          Who controls the banks and credit agencies in Europe? (here's a hint: it rhymes with "la snoverning hodies."

          Even if Microsoft stopped using Europe as a place to store their money (which they really can't do if they're going to have any people over there - they need a plac
      • Re:Easy (Score:5, Informative)

        by CowboyBob500 ( 580695 ) on Wednesday July 12, 2006 @09:13AM (#15704647) Homepage
        Since you cant put a corporate entity in jail...

        In the EU you can, sort of. Certainly in the UK, the board of directors are held directly responsible for the actions of the company. For example, there is a charge of "corporate manslaughter" here where the directors of a company can be put into prison for manslaughter if it can be shown that any deaths were caused by the actions of the company.

        Put simply, if MS do not pay the fine, then the minute Bill Gates, Steve Ballmer, or any of the top brass set foot in the UK (and most likely other parts of Europe too), they would be immediately arrested for non-payment of fines.

    • by JanneM ( 7445 ) on Wednesday July 12, 2006 @08:50AM (#15704494) Homepage
      What happens if they don't pay?

      What happens when anybody doesn't pay an outstanding court-ordered fine? Likely they'd just freeze their assets in Europe until it's paid. In extremis they'd sell off assets to cover the amount.

      Don't forget, this is a court-ordered fine - a punishment - upheld after an appeal. Nonpayment really is not an option. It will not come to that of course; just imagine what such an action would do to their credit rating and reputation.
      • by MarkByers ( 770551 ) on Wednesday July 12, 2006 @08:53AM (#15704512) Homepage Journal
        just imagine what such an action would do to their credit rating

        Ohhh I never thought of that. It will be a really huge problem for Microsoft if they ever need to purchase some new company cars but the bank won't loan them the money...

        How will they cope?
        • Re:Credit rating? (Score:5, Informative)

          by Kadin2048 ( 468275 ) <slashdot.kadin@xoxy. n e t> on Wednesday July 12, 2006 @08:58AM (#15704542) Homepage Journal
          I know you're joking, but large companies really do have a "credit rating" -- it's called their bond rating or bond score. They don't just go to a bank and borrow money, they basically write their own fiat currency (bonds) and sell them to raise capital. Depending on the perceived health of the company, the bonds are perceived as more or less risky.

          I don't know Microsoft's offhand, but I'm betting it's pretty good...not that they need to raise capital, with the amount of money they have sitting around.
          • Re:Credit rating? (Score:5, Informative)

            by JanneM ( 7445 ) on Wednesday July 12, 2006 @09:17AM (#15704666) Homepage
            It also affects their ability to do certain types of business. Refusing to pay a fine like this automatically adds them on various blacklists that at least a lot of governmental agencies and large corporations do follow and means they'd be ineliglible for contracts with those organizations.

      • by kylef ( 196302 )

        Don't forget, this is a court-ordered fine - a punishment - upheld after an appeal.

        No, this fine has absolutely NOT been appealed yet. This is a NEW (additional) fine imposed after the Comission declared noncompliance with the 2nd half of the original 2004 ruling. You can bet that Microsoft will absolutely appeal this fine, especially if they really did have 300 full-time employees working on compliance for the past 6 months, and the original "non-compliance" feedback for this documentation was not de

    • The EU gets a caught order to seize Microsoft assets to the value of the fine.

      + Intrest

      + Court costs

      + Recovery fees
    • the same things that's happened every other time they ignored a ruling - some judge ups the ante and slaps a slightly larger fine on them. Ballmer throws a few chairs, Gates sheds a single tear, and we are back to square one.
    • What happens if they don't pay?

      The same thing that happens when Citizen Joe doesn't pay. Couple of notices, first from authorities, then from collection agencies. Then freezing of assets. If it still doesn't help, liquidation of assets, or company.


    • How many cigarettes do you think you could get for selling the ass-virginity of a Microsoft Europe exec in prison?

    • by WhiteWolf666 ( 145211 ) <sherwin@ami[ ].us ['ran' in gap]> on Wednesday July 12, 2006 @10:35AM (#15705250) Homepage Journal
      Simple. The EC declares Microsoft in contempt, leevies a larger fine. Files a complaint with the WTO, files a complaint with the U.S. FTC and SEC. The fine continues to accrue interest.

      Microsoft still doesn't pay. The WTO complaint fails. FTC/SEC blow off the EC.

      Fine grows larger. EC confiscates Microsoft Europe's assets. Most likely, some nations (like perhaps China/Russia) confiscate some Microsoft assets as well, paying a portion to the EC.

      Microsoft still doesn't pay.

      EC prohibits Microsoft from doing business in Europe. EC strips Microsoft's European copyright, permitting free distribution of MS products. As you may or may not know, ISPs in Europe are closed related to the government. What would happen next would be nothing other than a full-off declaration of War on Microsoft by the EU, with ISPs blackholing WindowsUpdate in favor of a EuropeanUpdate site (with WGA removed), massive investment of capital by the EU into developing alternative systems, and million upons millions of Linux and/or OS X systems brought online within a year, all bearing the EU's seal of approval.

      Don't believe me? Europe's already done something similar with GSM [wikipedia.org]. While that wasn't quite as antagonistic, Europe isn't afraid to build its own analog, at considerable expense (see the Galileo global satellite system). The EU will protect it self, economically, and in terms of security. They'll "steal" Windows if need be, and Europe will happily develop its own OS, most likely, in my estimation, a heavily sponsored version of Linux (SuSE or Mandriva).
  • I think that it is worth $3 million a day to keep your OS closed, don't you?
    • They don't have to open the OS to avoid the fines, just provide a bundle of information on it to keep the EU happy. I doubt even after this bundle is delivered it'll be enough
  • But being Microsoft, I assume they would pay in pennies and demand a receipt?
  • wow (Score:4, Interesting)

    by joe 155 ( 937621 ) on Wednesday July 12, 2006 @08:44AM (#15704456) Journal
    what a small slap on the wrist which is small even by the standards that the EU set themselves, typical, the fine should have been over 1.8 bn euros if they'd done what they said (about 3m euros a day backdated to 2004)... why so small?
  • From the BBC site: (Score:5, Interesting)

    by A beautiful mind ( 821714 ) on Wednesday July 12, 2006 @08:45AM (#15704463)
    Telegraph EU fines Microsoft ,280.5m - 30 mins ago
    Guardian Unlimited EU hits Microsoft with 280.5m antitrust fine - 34 mins ago
    MSNBC Microsoft calls EU fine unjust - 37 mins ago
    vnunet.com EC slaps 280m fine on Microsoft - 38 mins ago
    The Register Commission beats Microsoft with ,280m stick - 41 mins ago
    You can almost believe in bias free journalism, can you? :)
  • Like, "our documentation wasn't good enough", or "those commissioners are too dumb to understand we don't deserve to be punished?"

    The real problem, of course, is that Windows is such a huge hairball -- as Scott McNealy so aptly put it -- that they don't really know how to unbundle. Complying with the law is just as late as everything else is.

    But before we all bash them too too hard -- where, again, are the usable Linux desktops that we'd like to have to replace Windows???
  • So what? (Score:3, Funny)

    by 8127972 ( 73495 ) on Wednesday July 12, 2006 @08:47AM (#15704477)

    1. 280 million Euros is a drop in the bucket for M$.
    2. They will delay, stall, and avoid paying for as long as possible.
    3. When #2 fails, they will magically announce that they are in compliance.
    4. ?????
    5. Profit!
  • Ballmer, hand me my personnal checkbook.
  • by bobbo69 ( 905401 ) on Wednesday July 12, 2006 @08:49AM (#15704482)
    From the FT: 'Under European Union competition rules companies that fail to comply with a Commission ruling can be fined up to 5 per cent of their daily worldwide turnover.

    In Microsoft's case this would be about $5.5m-a-day.'

    http://www.ft.com/cms/s/c55bc756-1047-11db-8f6f-00 00779e2340.html [ft.com]

    I would imagine that there would be stiffer penalties (i.e., non-financial aimed at curtailing MSFT's ability to trade in the EU) available if MSFT continued to defy the commission. If there were not this would be a de facto admission that companies can break the law in the EU with impunity if they are rich enough. I very much doubt the commission would tolerate that state of affairs.

    • Interesting (Score:3, Insightful)

      by Opportunist ( 166417 )
      So a company can, at max, be fined 5% of its income.

      I, on the other hand, can be fined for amounts that exceed my income by a few 100 percent.

      I'd sue. If I could afford it.
  • Who exactly gets the money? Lucky them. Surprised they don't levy fines like this more often.
  • I agree with the folks that posted about the whole "drop in the ocean" or "280 million euros is barely a dent" arguments. Until the EU hits them with even bigger fines or stiffer penalties, all MS is going to do is whine and moan and complain and stall stall stall and occasionally release whatever the EU demands.

    It's not really hurting them financially, but maybe all these fines will a.) start adding up and b.) start making average people pay attention to how MS is screwing other companies up. But chanc

  • by Opportunist ( 166417 ) on Wednesday July 12, 2006 @08:56AM (#15704529)
    EU: MS, you're fined 1.5 M a day.
    MS: Ok.

    (pause a year)

    EU: MS, you didn't pay, you're fined 2.5m a day.
    MS: Ok.

    (pause a year)

    EU: MS, you still didn't pay, you're fined 3.5m a day.
    MS: ok.

    Is it me or ... I mean, hell, if I didn't pay a speeding ticket I'd be in jail before this year is over, not next or some decade. What's a fine good for if the one fined doesn't bother paying?
    • EU: MS, you didn't pay, you're fined 2.5m a day.

      Wrong. They did pay the previous fine of some 490M EUR. They now get a daily fine because they still haven't complied with the court's ruling from that trial.

      You're making it sound as if the imposed fines had no effect. Admittedly, they haven't had the desired effect (which is compliance with the court's ruling) yet, but they are effective in bleeding (and thereby penalizing) Microsoft.
  • Reality check (Score:5, Insightful)

    by Anonymous Coward on Wednesday July 12, 2006 @09:23AM (#15704704)
    So many stupid/nonsense answers. Reality is

    1) Yes, the EU can enforce the money. If MS doesn't pay, EU can hit them with sanctions (what do you think, how big is the EU part of MS revenue pool. Right, pretty relevant) and finally seize their physical assets. (Guess what, MS exists outside the US)

    2) MS has no threatening potential against the EU. What should they do: Increase prices? --> antitrust case! Threaten to pull out? --> They would cut their own profits significantly. EU could immediately legalize copies from the US (they wouldn't, but let's say Win/Office is declared important for national security or something...)

    3) The US government will not put pressure on the EU here. Yes, they may protest, yes, they may have some impact, but come on guys. Where not talking about some small banana republic. Also look at the history of the EU anti-trust comission. Remember the GE/Honeywell-merger?

    4) Yes, the fine does matter. 280m is a lot of money also for MS, from end of July on it will be 3m/day=~1b/year=~8% of EBIT (probably increasing over time). Yes, that DOES matter. What will financial markets think of that, what will that do to stock options of MS managers?

    Summary: MS will pay, MS will obey and try to comply (they already started, just too slow...) with the ruling, MS will of course continue to use all means of lobbying (which is their good right).

    Now the more interesting question is, if they have a chance with their appeal before the European Court of Justice, which doesn't look too bad for them...

  • by golodh ( 893453 ) on Wednesday July 12, 2006 @09:27AM (#15704727)
    I must say that I find the EU the embodiment of reasonableness in this case. Not only do I consider the fine fully justified, the EU is evidently taking very special care not to (unduly) hurt Microsoft while still getting their full attention. The EU is clearly after compliance .. not revenues. To a company such as Microsoft, the amount of 280 million Euros is quite affordable (as many others noticed), but it still is a lot of money.

    As I see it, the EU is telling Microsoft:

    "Ok, Microsoft you had your chance to document your API's two years ago as you were told to, but instead you chose to try and mess with us and we just don't believe you when you said you made an honest effort to comply. So here is your fine. If you think you are going to appeal your way out of this ... good luck to you. Now we know that you are working to better your lives, and we want your compliance more than your money, so we won't hurt you as much as we could have. We actually want you to do business in the EU, and for that reason we will go easy on you this time. Only ... if you think you can make a fool of us again, prepare for fines that *are* hurtful."

    There are worse attitudes I suppose.

  • by Carcass666 ( 539381 ) on Wednesday July 12, 2006 @10:15AM (#15705076)

    What will work is redirecting the money wasted on legal action in a bonafide attempt to ascertain the feasibility of switching servers and workstations to Linux. They won't be able to do it everywhere, but they could concentrate on the following:

    • Migrating from Exchange to the newly announced Notes on Linux
    • Setting up file storage shares on Linux/Samba instead of Windows Server/Windows Storage Edition
    • Migrating targeted groups of users from Microsoft Office to Open Office ("power" users may be harder to switch, but the guy using Word as a memo authoring package will be able to)
    • Migrating ASP/ASP.NET applications to Java Server Pages (or maybe PHP)

    Investors won't freak out because of a arbitrary fine that Microsoft won't end up paying (they'll settle on a lower amount or give away licenses or something). Investors will freak if an entire continent starts a concerted effort to shut down a significant part of Microsoft's revenue stream.

  • Precedent (Score:3, Insightful)

    by SleeknStealthy ( 746853 ) on Wednesday July 12, 2006 @10:26AM (#15705169)

    I am as big of a Linux finatic as the next slashdotter, but I am having a hard time understanding the basis for the magnitude of this fine. I am a firm believer that Microsoft has its monopoly because Microsoft Office has consistently been the most robust office package on the market. I have to run VMWare at home just because I can't use another office product.

    However, the information that the EU demands seems to be nothing more than an extortion attempt. Samba has worked flawlessly with Microsoft's SMB implementation for years, and I can add linux to a windows domain, authenticate agains a Microsoft ADS and plugin to Microsft Exchange server with Evolution. So what is the real issue, all of these functions have been created without taking anything from Microsoft, but rather from innovation from the Linux community.

    I am not going to debate whether or not Microsoft has used its market share for good or ill, but I don't see how it much affects any other operating system. Corporations have always commanded the popular OS and companies choose the OS on what platform will make the employees the most efficient. Microsoft Office is still unreplaceable and it is the main anchor to the Windows platform. Office 2007 is one of the best software products I have used to date, so I don't see that going away. It will be the slow detereriation of the desktop that erodes the grip of Windows, not litigation from governments over non-existent issues

    At least this is my take. If I had a car that controlled 90% of the market, would it be fair to make me compete without seats or a stereo? Who even cares, linux and apple technologies and innovations are maturing and besting such commodity apps. such as media players, web browsers, picture managers, etc.

    • Re:Precedent (Score:3, Insightful)

      by MrNemesis ( 587188 )
      Samba has worked flawlessly with Microsoft's SMB implementation for years, and I can add linux to a windows domain, authenticate agains a Microsoft ADS and plugin to Microsft Exchange server with Evolution.

      Really? I was under the impression that the public documentation for SMB was a) hugely out of date and b) wrong in many cases. Much of the hard work of projects like Samba has been done by painstaking packet sniffing and reverse engineering. Even now, Samba still can't act as an AD domain controller (unle
  • by AnonymousDot ( 517935 ) on Wednesday July 12, 2006 @11:07AM (#15705515) Homepage
    Source: [europa.eu] http://europa.eu/rapid/pressReleasesAction.do?refe rence=MEMO/06/277&format=HTML&aged=0&language=EN&g uiLanguage=en [europa.eu]

    Competition: Commission Decision of 12 July 2006 to impose penalty payments on Microsoft - frequently asked questions

    What is Microsoft required to do?
    The European Commission's Decision of March 2004 required that Microsoft take various steps to put an end to its illegal and anti-competitive conduct (see IP/04/382 and MEMO/04/70). These included obligations to:

    1. supply complete and accurate interface information which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers; and
    2. make that information available on reasonable terms.

    On 10 November 2005, the Commission warned Microsoft, pursuant to Article 24(1) of Regulation 1/2003, that should Microsoft not comply with these obligations by 15 December 2005, it would face a daily penalty payment of up to 2 million (see IP/05/1695). Article 24 of Regulation 1/2003 entitles the Commission to impose such penalty payments not exceeding 5% of average daily turnover in the preceding business year per calendar day to compel companies to put an end to infringements of EC Treaty anti-trust rules, where an infringement has been established by a previous Commission anti-trust decision.

    Why has the Commission levied a penalty payment for non-compliance on only the failure to provide interoperability information, and not the terms on which that information is provided (i.e. the first and not the second of the two points from the 10th November 2005 Article 24(1) Decision)?
    As regards the provision of information on reasonable terms, Microsoft has announced that it will review the pricing of its protocols once revised technical documentation has been submitted. Furthermore, a final assessment on the degree of innovation, if any, that is contained in the interoperability information, and hence the reasonableness of the royalties that Microsoft charges, can only be made once the technical documentation embodying that interoperability information is complete and accurate.

    Why has the Commission decided that the fine levied should be 1.5 million per day?
    Of the two elements of non-compliance identified in the Article 24(1) Decision, 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 failure to comply in this respect should at this stage constitute a larger part of the daily penalty payment identified in the Article 24(1) Decision of 10 November 2005.

    Why has the Commission taken today's Decision given that Microsoft is in the process of preparing revised technical documentation?
    Microsoft's obligation was to comply with the March 2004 decision's requirement to make available the relevant technical documentation as of June 2004. As of 20th June 2006, Microsoft had not done that, and the Commission decided that it was appropriate to levy a fine on Microsoft for its non-compliance so far.
    More than two years after the 2004 Decision, the Commission has therefore been obliged to resort to formal measures to ensure compliance. If any revised documentation that Microsoft submits proved to be complete and accurate, then Microsoft would not be subject to further daily penalty payments from the date on which complete and accurate technical documentation was provided. This would be the best outcome. However, if Microsoft continued t

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