Microsoft appeal of 899-million euros fine may limit EU powers

LUXEMBOURG: Microsoft Corp.'s challenge to an 899 million-euro ($1.26 billion) European Union penalty for failing to comply with an antitrust ruling may lead to a curb on regulators' powers.

The world's largest software company will tell judges at an appeal hearing on Tuesday that in 2008 the European Commission failed to give it sufficient guidance to avoid the fine.

Microsoft is the only company in more than 50 years of EU competition policy to be penalized for failing to comply with an order.

The Brussels-based commission said it breached an earlier ruling by overcharging for licenses that rivals needed to connect products to Windows computers. As the first appeal of such a decision, the judges at the EU General Court in Luxembourg will clarify the scope of the commission's power.

"It's not about the money for Microsoft, it's not about the money for the commission or the other applicants," said Nicolas Petit, a competition law professor at the University of Liege in Belgium.

"At the heart of the case is whether a regulator can find and penalize infringements without really saying what the substance of the law is."

The commission, the EU's antitrust authority, imposed the 899 million-euro fine as a so-called periodic penalty payment on Redmond, Washington-based Microsoft for failing to comply with a 2004 antitrust order.

Under the initial decision, Microsoft was fined 497 million euros and ordered to provide data to competitors to allow servers to connect to computers using the Windows operating system.

`Reasonable' Royalties

Microsoft was also required to limit to a "reasonable" amount the royalties it charged for the technology. An EU court in September 2007 rejected Microsoft's appeal of that decision.

Today's case is the last remnant of years of disputes with the commission that resulted in fines totalling 1.68 billion euros. Microsoft agreed to a settlement in 2009 in a bid to close a long chapter in the company's uneasy relationship with the EU regulator.

"The fine related to the price Microsoft had proposed for one of several forms of licenses for the technology Microsoft was required to make available by the commission's 2004 decision," said Jesse Verstraete, a spokesman for Microsoft in Brussels.