SPEECH/06/452

Neelie Kroes

European Commissioner for Competition Policy




Press conference on imposing penalty payments on Microsoft – introductory remarks

European Commission
Brussels, 12^th July 2006

The European Commission, ladies and gentlemen, is entrusted by the EC Treaty to verify and ensure compliance with EU law.

In the case of Microsoft, I sincerely regret that the company has still not put an end to its illegal conduct.

It is now more than two years since the Commission’s March 2004 Decision that found Microsoft to be in violation of the EU’s anti-trust rules by abusing its dominant market position.

It is more than 18 months since an Order from the President of the Court of First Instance required Microsoft to comply with the Decision without delay.

The European Commission cannot allow such illegal conduct to continue indefinitely.

No company is above the law. Each and every company, large or small, operating in the European Union must obey EU law, including competition law, to the benefit of all companies and European consumers.

That is why the Commission has today fined Microsoft a total of 280.5 million euros for its failure to comply with the March 2004 Decision as regards the requirement to provide complete and accurate interface specifications, so as to allow other companies to make their products interoperable with Microsoft PCs and servers. The fine corresponds to 1.5 million euros per day, during the period from 16 December 2005 to 20 June 2006.

This is the first time ever, in the 49 year history of the European Union, that the Commission has had to fine a company for failure to comply with an anti-trust decision.

I hope that it is also the last.

In deciding to impose this fine, the Commission has taken a cautious approach to assessing Microsoft’s compliance.

The Commission has looked carefully at numerous reports by the Monitoring Trustee – a highly capable professional recommended by Microsoft itself – who has been assisted by experts of world renown. It has looked in depth at Microsoft’s documentation. It has considered very carefully the replies by Microsoft and its experts to the objections raised by the Commission.

Having carefully weighed all of the evidence, only one conclusion was possible. From 16 December last year to 20 June of this year:

• Microsoft did not even come close to providing complete and accurate specifications
• Microsoft therefore remained in breach of the Commission Decision and
• The Commission had no option but to impose a penalty payment on Microsoft.

The fine is a substantial amount of money. The Commission has shown restraint in setting the level of the fine, seeking to do no more than is necessary to induce Microsoft to comply with the Commission’s decision.

Microsoft has told me that they are now devoting substantial resources to compliance.

It is a great pity that they did not do so two years ago, before there was the threat of imminent fines.

If the compliance effort had begun in earnest in March 2004, the burden on Microsoft’s staff would have been much lighter.

I don’t buy Microsoft’s line that they did not know what was being asked of them because the March 2004 Decision is crystal clear.

The Decision states that they have to provide complete and accurate specifications that will allow the development of interoperable products. In the period covered by today's decision, Microsoft's documentation fell significantly short of this requirement.

If the latest documentation is not sufficient to comply with the March 2004 Decision, the Commission will once again be forced to consider the imposition of fines.

And in order to increase the incentive for Microsoft to comply, the Commission has decided that the ceiling for potential fines will be raised. Should Microsoft not comply with its obligations to provide complete and accurate specifications at an appropriate level of remuneration, then – with effect from 31^st July – the potential fines will be raised from 2 million euros per day to 3 million per day.

I sincerely hope that further penalty payments will not prove necessary for the quality of the documentation, the remuneration required for access to and use of the documentation, or for any other aspect of compliance with the 2004 Decision.

Full and complete compliance with the March 2004 Decision would be the best outcome for the company and for the company’s European customers.