The European Commission got solid backing for its plans to fine Microsoft from national competition regulators around the European Union Monday, said a person close to the Commission.
The European Commission got solid backing for its plans to fine Microsoft from national competition regulators around the European Union Monday, said a person close to the Commission.
However, the size of the fine remains confidential, the person said.
National regulators held a brief meeting early Monday to discuss the fine. The meeting came exactly a week after a gathering of the same national regulators, at which they unanimously backed the Commission’s plan to rule against Microsoft in an antitrust case.
Agreeing to the fine is always left until a few days before the final Commission ruling, in order to minimize the chance of the amount being leaked to the press.
On Tuesday the fine, expected to total hundreds of millions of euros, will be discussed by senior aides to all 20 commissioners, before being brought to the commissioners’ meeting on Wednesday morning. Microsoft will then be informed of the fine and sent a summary of the ruling by fax, shortly before competition commissioner Mario Monti holds a press conference to announce the decision.
“We have already told Microsoft many times that a negative ruling will incur a fine,” said Amelia Torres, Monti’s spokeswoman. People close to Microsoft were speculating over the weekend that the Commission may not issue any fine at all.
“In previous antitrust cases the Commission has waived a fine in cases where the company involved didn’t know it was breaking European antitrust law,” the source close to the commission said, adding: “Microsoft could argue that it didn’t know until now that its behavior broke the rules.”
Although she wouldn’t divulge the amount, Torres said a fine is definitely on the cards. “A small company could claim it didn’t know the rules but not one the size of Microsoft,” she said.
The Commission is expected to rule on Wednesday that Microsoft abused the monopoly position of its Windows operating system twice. By withholding vital information about Windows from makers of software for servers, the firm gained an unfair advantage over them in the market for server software; it also competed unfairly by bundling its Media Player software into Windows, the ruling is expected to find.
The Commission is expected to announce remedies to restore competition in these markets. Microsoft will likely be ordered to sell two versions of Windows to PC makers in Europe: one with Media Player stripped out.
It is also likely to have to share more secret Windows code to allow rival server software makers to compete with Microsoft server software more fairly, according to people close to the case. Computer servers drive networks of PCs.
These remedies are much more important than the fine in terms of making an impact on Microsoft, analysts said.
Wednesday’s ruling will set a precedent which could strengthen any legal challenge of alleged monopoly abuse by Microsoft. Development of the next generation of Windows, which is codenamed Longhorn, could be affected, some analysts said.
“The ruling may have a significant impact on the planning for Longhorn,” said Dan Kusnetzky, an analyst with IODC.
Even if the Commission imposed the maximum fine — 10% of the company’s global sales of around $36 billion — this would still be a small part of Microsoft’s huge cash reserves of around $52 billion.
Even so, the Commission is trying hard to prevent the exact size of the fine leaking out. “We warned the national regulators not to reveal the figure today,” said Torres.
A leak could bolster Microsoft’s chances in an appeal of Wednesday’s ruling, by showing that the Commission didn’t observe all the legal procedures in the antitrust process, she said.
After talks collapsed last Thursday Microsoft’s chief counsel Brad Smith said the company will appeal the ruling at the European Court of First Instance.
