EU Commission, Competition and Computers

February 27, 2008


Although the main reporting of the massive ‘fine’ imposed by the EU Commission has been relatively sensational, the truth is that this was to a large extent the realisation of a calculation. It is not in fact a ‘fine’ in the strictest sense – or in EU parlance. It may be thought to have been inevitable once Microsoft itself altered its terms of licensing for interoperability in the light of the ruling of the ECJ last September. The € 899 million penalty for non-compliance with the ruling of March 2004 has been imposed for Microsoft’s behaviour up to October 2007. The EU Commissioner for Competition now accepts that the licensing terms sought by Microsoft since October 2007 are reasonable.

‘Microsoft was the first company in fifty years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision’, said European Competition Commissioner Neelie Kroes. ‘I hope that today’s Decision closes a dark chapter in Microsoft’s record of non-compliance with the Commission’s March 2004 Decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft’s future conduct’.

The Commission’s Decision of March 2004 required Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems on reasonable terms.

The imposed penalty payment is higher than the fine imposed on Microsoft in the 2004 Decision because fines and penalty payments are different in character. While fines sanction past infringements, penalty payments are intended to induce a speedy end to non-compliance with a previous Commission decision. A maximum daily amount is fixed in advance in order to create a sufficient deterrent from further non-compliance and the total potential liability is based on the application of this daily amount to the subsequent period of non-compliance. The maximum amount for fines under Regulation 1/2003 is 10 % of the yearly turnover of the concerned undertaking whilst the maximum amount for daily penalty payments is 5 % of the average daily turnover per day.

Acer/Packard Bell

Less publicity surrounded the decision by the Commission to approve the proposed acquisition of the Dutch-based company Packard Bell by Taiwan-based personal computers manufacturer Acer. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Acer is a global supplier of PCs and related products, including laptop and desktop personal computers, servers and storage, LCD monitors and high definition TVs. Packard Bell is a European supplier of desktops, notebooks and digital entertainment solutions.

The Commission’s examination showed that the proposed merger would entail horizontal overlaps for desktops and laptops, both for professionals and consumers, at the EEA and national levels. However, the market would remain competitive post-merger in all segments of the PC sector with established alternative suppliers such as Hewlett-Packard, Dell, Fujitsu-Siemens, Toshiba, Sony and Lenovo. Further information can be found at