Software giant facing fine of $404m

MICROSOFT, the world’s largest personal computer software company, is expected to be fined up to $404 million and given a deadline to permit rivals using its operating systems next week.

This follows a last minute breakdown of anti-competitive negotiations between the US giant and EU competition authorities in Brussels yesterday.

In a statement Microsoft strongly hinted they will take the case to court and suggested the current impasse is just the latest step in a long running battle.

EU Competition Commissioner Mario Monti decided to pull the plug on the negotiations yesterday in Brussels when he could not get agreement on commitments for the future operation of Microsoft.

The EU launched investigations into Microsoft, in the early 1990s because of complaints from rivals that they were abusing their dominant market position.

They manufactured the Windows operating system in such a way that rival products for audiovisual, data and other add-ons could not be used easily or at all.

Last year Netscape Communications, now owned by AOL, won an anti-competitive case against them in the US where Microsoft was fined $750m and forced to allow Netscape a niche.

Despite other actions and Court wins over Microsoft in the US the Justice Department a few months ago said they were concerned that the giant corporation was still abusing its position by killing competition.

The European Commission was anxious to ensure the same did not happen in Europe and is determined that any agreement reached would build in principles for the future.

Commissioner Monti announcing that they failed to reach a settlement with Microsoft said, "We made substantial progress towards resolving the problems which have arisen in the past but we were unable to agree on commitments for future conduct.

"In the end I had to decide what was best for competition and consumers in Europe. I believe they will be better served with a decision that creates a strong precedent.

"It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market."

The expert committee will meet on Monday to agree the size of the fine normally it is 10% of sales which would amount to $500m and on what actions they want Microsoft to take.

They are also likely to agree to further action if Microsoft refuses to meet the demands such as providing a stripped down version of Windows where rivals could easily have their products installed and share confidential information with rivals that would allow them make their product compatible with Windows.

The member states have already unanimously backed the action Mr Monti wants to take and the college of Commissioners is expected to adopt the decision at the meeting next Wednesday.

Steve Ballmer, chief executive officer of Microsoft made an emergency trip to Brussels for the latest round of talks with the Commission. In a statement afterwards the company said they believed their settlement offer would have resolved the case not just in Europe but around the world, and right now.

Brad Smith, senior vice president and general counsel of Microsoft said, "Even though we could not agree on a single formula for all future questions, settlement would have helped us work constructively to resolve future issues.