EU issues warning to Microsoft over disobedience on antitrust ruling

Microsoft’s refusal to comply with some of the obligations under its antitrust ruling in March 2004 may prompt the European Commission (EU) to consider stiffer penalties in future antitrust cases, Europe’s chief competition enforcer told US lawyers.

Neelie Kroes, the European Commission’s competition commissioner, told a conference in Washington, that a more drastic remedy such as a breakup may be needed for companies that continue to abuse their market dominance.

Under the terms of the antitrust ruling, Microsoft is supposed to disclose complete and accurate interface documentation on ‘reasonable and non-discriminatory terms’ to allow non-Microsoft work group servers to inter-operate with Windows PCs and servers.

The EU executive accused Microsoft of demanding excessive royalties for the licensing of its software protocols last month. However, Microsoft claims its prices are justified as the data comes from its own work, with its sensitive technical information protected by patents.

Microsoft previously agreed that the main basis for pricing should be whether its protocols are innovative.

But the Commission said it believes there is no significant innovation in the company’s interoperability protocols to warrant higher prices, and rejected as unfounded the 1500 pages of interoperability information made available by Microsoft from December 2005 onwards.

However, the Commission said it is still considering whether the interoperability information is complete and accurate.

In a PriceWaterhouseCoopers analysis Microsoft’s prices were judged to be at least 30% below the market rate for comparable technology, Brad Smith, Microsoft’s senior vice president and general counsel said.

According to Hemscott, Smith argued that other government agencies in the US and Europe have found ‘considerable innovation’ in the company’s protocol technology.

Patent offices have awarded Microsoft more than 36 patents for technology and another 37 are pending, “so it’s hard to see how the commission can argue that even patented innovation must be made available for free,” he added.

Smith also said that Microsoft has always been ‘willing’ to consider reasonable price offers from potential licensees and ia currently conducting negotiations.