Kroes mulls fresh legal challenge to Microsoft

The European Commission is preparing a fresh legal challenge to Microsoft on top of the €2 million in daily fines looming over the company, according to sources familiar with the case.

Competition Commissioner Neelie Kroes is preparing to impose fines on the IT giant for failing to comply with the March 2004 ruling ordering it to allow rival firms to develop products which can interoperate with its computer server software.

Unless the company complies with the Commission decision by supplying adequate documentation for other software developers, Kroes is expected to ask her fellow commissioners to decide on 17 July to impose fines of up to €2m a day on Microsoft. This decision would be backdated to 15 December, which might land the company with an immediate bill of more than €400m.

According to sources familiar with the case, even if the fines put sufficient pressure on the company to comply, the Commission is planning to move on to a legal challenge to Microsoft's proposals for the licensing fees that it wants to charge other companies for using its software. It will issue a formal 'statement of objections' setting out its problems with Microsoft's offer. If the company failed to justify its position to the Commission, a new procedure for authorising fines could be started.

In March 2004, the Commission ruled that Microsoft had abused the dominant position of its Windows PC desktop operating system to squeeze out competitors in other markets. It ordered the company to make available documentation on its workgroup server software. In November 2005, following a very critical report from an independent expert, Kroes warned that the Commission would fine the company unless it complied with the ruling.

The decision as to whether to impose a fine and its size will be put to EU member states' experts at meetings on 3 and 10 July.

Microsoft has been submitting a series of revised versions of the documentation to satisfy the Commission and the latest is expected on 18 July, a day after the Commission is scheduled to decide on a fine.

Microsoft's senior lawyer in Europe, Horacio Gutierrez, said that any fine imposed by the Commission would be "unjustified and unnecessary".

The European Committee for Interoperable Software, which represents rival companies to Microsoft such as IBM, Sun Microsystems and Nokia, said in a statement: "Microsoft has still not provided the inter-operability information requested by the Commission over two years ago. We trust the Commission will take whatever actions are necessary finally to ensure compliance and end the harm this delay has caused for consumers and competition."

The European Commission is preparing a fresh legal challenge to Microsoft on top of the €2 million in daily fines looming over the company, according to sources familiar with the case.

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