Posted on 25-3-2004
EU Fines Microsoft
24.03.2004, By David Usborne
NEW YORK - Tensions between the United States and the European
Union are
set to be inflamed as the European Commission prepares to release
details
today of a record £497m fine to be imposed on American
software giant
Microsoft for allegedly impeding free competition.
Pressure will rise on the White House to challenge the decision,
which,
after a five-year probe, will be approved at a full meeting
of the
European Commission today on recommendations from the EU competition
chief, Mario Monti. It will be the highest fine ever imposed
by Brussels
on a foreign company.
"This ruling is yet another example of the EU assaulting
a successful
American industry and policies that support our economic growth,"
said US
Senator Patty Murray, a Democrat from Microsoft's home state
of
Washington. She called on President George Bush to "engage"
with Brussels
on the case.
More important may be the reaction of the US Justice Department,
which
negotiated a settlement with Microsoft in 2001 after a similar
investigation into claims that its Windows software was unfair
to
competitors in the industry. As details of the impending EU
decisions have
leaked out, officials in Washington have maintained a more or
less tactful
silence.
Last week, an official at the Justice Department said it believed
its
settlement "provides the appropriate framework for marketplace
competition
in this important sector". But Senator Murray insisted
the EU "has now
directly attacked the authority of the United States and our
economy in
general. American jobs and economic interests are threatened".
There was similar controversy three years ago when the EU took
the unusual
step of overriding regulators in Washington and blocking a proposed
merger
between General Electric and Honeywell. Although both were American
companies, the EU is entitled to intervene in cases where the
companies in
question do substantial business in Europe. In the latest case,
Europe
accounts for 30 per cent of Microsoft's revenues.
Microsoft's chief lawyer in Europe, Horacio Gutierrez, signalled
its
intent to appeal against today's ruling, which also includes
provisions
requiring the company to offer stripped-down versions of Windows
without
its media player software. "We believe it's unprecedented
and
inappropriate for the Commission to impose a fine on a company's
US
operations when those operations are already regulated by the
US
Government," Mr Gutierrez said, referring to the 2001 Justice
Department
accord. "The conduct at issue has been permitted by both
the US Department
of Justice and a US court."
The fine, though very large by European standards, would barely
dent
Microsoft, which reportedly has more than $50b cash in hand.
The
restrictions on its ability to bundle extra features with Windows
is a far
more threatening prospect. Yet the effect of the EU decision
could be
delayed by months or even years if the company pushes ahead
with an
appeal.
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