$713m fine as Microsoft caught with its browsers up
EU competition commissioner Joaquin Almunia said the bloc had been "naive" to put Microsoft in charge of monitoring its adherence to the deal it agreed to in 2009, when his predecessor let the company escape a fine in exchange for offering users of its Windows software a wider choice of internet browsers.
Mr Almunia insisted the enforcement of settlements could be sufficiently strengthened to ensure companies abide by their pledges, and signalled he would not retreat from his goal to use such deals to avoid lengthy legal battles with companies in swiftly evolving technology markets.
Settlements "allow for rapid solutions to competition problems", Mr Almunia said. "Of course such decisions require strict compliance" and the "failure to comply is a very serious infringement that must be sanctioned accordingly."
Microsoft agreed to alter Windows for five years to give users of new computers in Europe a ballot screen that would allow them to easily download other browsers from the internet and to turn off Microsoft's browser, Internet Explorer.
Microsoft told the commission at the end of 2011 that it had been abiding by the deal. "We trusted the reports about the compliance," Mr Almunia said Wednesday.
In fact, the company failed to include the ballot system in certain products starting in May 2011, affecting more than 15 million European users. The lapse came to light in July after rival companies reported its absence.
"We take full responsibility for the technical error that caused this problem and have apologised," Microsoft said.
"We have taken steps to strengthen our software development and other processes to help avoid this mistake - or anything similar - in the future."
A Microsoft spokesman declined to comment on whether the company would appeal, but it seemed unlikely, as the company prefers to focus on its rivalry with Google. Microsoft is among the companies that have complained about Google's business practices to Mr Almunia.
In the Microsoft case, Mr Almunia said some of the blame rested with regulators and indicated that the commission might never again, in effect, put the fox in charge of the henhouse.
He said the commission would be more inclined to use trustees to police future settlements, would be more precise in defining their responsibilities and would "pay even more attention to the reports that the monitoring trustees will send to us".
The decision against Microsoft was a milestone for EU antitrust law, and for Microsoft, which became the first company to be punished for failing to adhere to a settlement.
Although the commission can levy fines of up to 10 per cent of a company's most recent global annual sales, the penalty issued this week represented 1 per cent of Microsoft's sales, partly because it co-operated with the commission after the issue was revealed.
Mr Almunia said there had been no indication that Microsoft intentionally broke the settlement agreement. The fact that nobody - apart, apparently, from rival companies - noticed the absence of the browser choice screen for more than a year has prompted critics of the European antitrust enforcement to question the effectiveness of the measure.
Frequently Asked Questions about this Article…
The European Union fined Microsoft US$732 million (about $713 million) for failing to respect a 2009 antitrust settlement. Microsoft had agreed to include a browser choice “ballot screen” in Windows so European users could easily download alternatives to Internet Explorer, but that ballot was omitted from certain products starting in May 2011 and affected more than 15 million European users.
According to the article, the missing ballot screen meant users of new Windows computers could not easily access the option to download other web browsers or to turn off Microsoft’s Internet Explorer. The lapse began in May 2011 and impacted more than 15 million users until rivals reported the absence in July, prompting the EU investigation.
The commission can impose fines up to 10% of a company’s most recent global annual sales, but the penalty in this case represented roughly 1% of Microsoft’s sales. The article says that figure was partly because Microsoft cooperated with the commission once the issue was revealed.
Yes. EU competition commissioner Joaquin Almunia publicly said the commission had been “naive” to put Microsoft in charge of monitoring its own compliance and acknowledged some responsibility for not catching the lapse. He signalled the commission would strengthen enforcement and monitoring of settlements.
Microsoft said it took full responsibility for the technical error, apologised, and had taken steps to strengthen its software development and other processes to help avoid a repeat. A company spokesman declined to comment on whether it would appeal, and the article suggested an appeal seemed unlikely as Microsoft preferred to focus on its rivalry with Google.
The absence of the browser choice screen came to light in July after rival companies reported that the ballot screen was missing. Until then, the commission had been relying on reports that Microsoft was in compliance.
The decision is a milestone because Microsoft became the first company to be punished for failing to adhere to a settlement with the EU. It highlights that settlements require strict compliance and that enforcement can carry significant sanctions if companies do not meet their obligations.
Commissioner Almunia said the commission would be more likely to use independent trustees to police future settlements instead of leaving companies to monitor themselves, would define trustees’ responsibilities more precisely, and would pay closer attention to the reports trustees send to the commission.
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