- The Washington Times - Wednesday, July 12, 2006

1:50 p.m.

BRUSSELS (AP) — The European Union fined Microsoft Corp. $357 million today and threatened more penalties, saying the company failed to obey a 2004 antitrust order to share technical information that would allow rivals’ software to communicate better with Windows.

Microsoft said it would appeal the fine, claiming the hefty amount was unfair. Its shares fell 36 cents, or 1.6 percent, to $22.74 in early trading on the Nasdaq.

The EU also said it would double fines to nearly $4 million a day starting July 31 unless the company supplies “complete and accurate” technical information to help rivals make software that works smoothly with its ubiquitous Windows operating system.

“Microsoft has still not put an end to its illegal conduct,” said EU Competition Commissioner Neelie Kroes. “I have no alternative but to levy penalty payments for this continued [lack of] compliance. No company is above the law.”

Microsoft general counsel Brad Smith said the company would ask the EU’s second-highest court, the Court of First Instance, if its compliance efforts have been sufficient. He said the EU had never been clear about what it wanted.

“We have great respect for the commission and this process, but we do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the commission’s original decision and our good-faith efforts over the past two years,” he said.

“I don’t buy that line,” Ms. Kroes said, describing the EU’s demands of March 2004 as “crystal clear.”

The EU imposed daily fines of $1.9 million after a Dec. 15 deadline through June 20, when it decided Microsoft still was violating EU law.

Microsoft earned $2.98 billion in the quarter ended March 31 on revenue of $10.9 billion. It has three months to pay today’s fine.

The EU already had levied a record fine on Microsoft in 2004, saying it had deliberately tried to cripple rivals as it won control of the market, and ordered it to hand over communication codes to those rivals.

Ms. Kroes said today that she warned Microsoft to take care to avoid antitrust problems with its new Vista operating system, which will include an Internet search and a PDF-type document reader that could pose problems for rivals.

Ms. Kroes said she had shown restraint on the new fines because the EU can fine a company up to 5 percent of its annual global revenue. That would mean a fine of $5.47 million a day out of Microsoft’s daily revenue of $109.47 million, she said.

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