The EU Commission has fined Microsoft for its non-compliance with browser choice commitments
The European Commission has imposed a €561 million fine on Microsoft for failing to comply with its commitments to offer users a browser choice screen enabling them to easily choose their preferred web browser. In 2009, the Commission had made these commitments legally binding on Microsoft until 2014 (see IP/09/1941). In the decision published on 6 March, the Commission finds that Microsoft failed to roll out the browser choice screen with its Windows 7 Service Pack 1 from May 2011 until July 2012. 15 million Windows users in the EU therefore did not see the choice screen during this period. Microsoft has acknowledged that the choice screen was not displayed during that time.
Commission Vice President in charge of competition policy Joaquín Almunia said: "In 2009, we closed our investigation about a suspected abuse of dominant position by Microsoft due to the tying of Internet Explorer to Windows by accepting commitments offered by the company. Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems. Of course, such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly."
In December 2009, the Commission had made commitments offered by Microsoft legally binding on them to address competition concerns related to the tying of Microsoft's web browser, Internet Explorer, to its dominant client PC operating system Windows (see IP/09/1941, MEMO/09/558 and MEMO/09/559). Specifically, Microsoft committed to make available for five years (ie until 2014) in the European Economic Area a "choice screen" enabling users of the Windows operating system to choose in an informed and unbiased manner which web browser(s) they wanted to install in addition to, or instead of, Microsoft's web browser.
The choice screen was provided as of March 2010 to European Windows users who have Internet Explorer set as their default web browser. While it was implemented, the choice screen was very successful with users: for example, prior to November 2010 84 million browsers were downloaded through it. When the failure to comply was detected and documented in July 2012, the Commission opened an investigation (see IP/12/800) and before taking a decision notified to Microsoft its formal objections in October 2012 (see IP/12/1149).
This is the first time that the Commission has fined a company for non-compliance with a commitments decision. In the calculation of the fine the Commission took into account the gravity and duration of the infringement, the need to ensure a deterrent effect of the fine and, as a mitigating circumstance, the fact that Microsoft has cooperated with the Commission and provided information which helped the Commission to investigate the matter efficiently.
EU Competition partner Charles Whiddington of Field Fisher Waterhouse said:
'Microsoft's €561M fine is consistent with the EU Commission's hard-line response to parties which disregard the rules. The implications for companies going forward is that they must be more rigorous in complying with any agreement with the Commission, which does not take prisoners for infractions. Companies face severe sanctions for flouting EU rules, even accidentally. This is the first penalty in such a situation; but the Commission has shown itself to be tough in relation to other breaches of rules, regardless of whether the "oversight" was deliberate, negligent or purely accidental. There are a number of examples in relation to infringement inspections where it has imposed tough sanctions, including €38M imposed on E.ON for the breaking of a seal to a room in which materials relevant to its continuing inspection were held. In another case, a €1.7M fine was imposed for keeping its inspectors waiting for 47 minutes. In the Microsoft case, the fine will reflect the Commission's view on: the number of consumers affected, the erroneous filing of monitoring reports, the scale of the impact and the inadequacy of measures taken to ensure compliance by an undertaking with the resources Microsoft had at its disposal.'
'This is the first time any company has been fined by the European Commission for breaching commitments and it sends a strong message that they will be taking compliance very seriously from now on. This reaches beyond the technology industry'" said Paul Stone, a competition partner at Charles Russell.
Vanessa Barnett, a technology and media partner at Charles Russell, commenting on the wider impacts of this in the technology market and the alleged Google 'tip-off', said 'It's quite clear now that the global technology elites are in a perfect battle, using all avenues open to them to try and make a dent in their competitors. Whether it's patent wars, anti-trust mudslinging or good old fashioned PR about the features and benefits of products, it really is game on now - now we know that regulators do have the appetite to bite, it could hail a renewed age of the snitch!'
Where a company breaks legally binding commitments, Article 23 (2) of the Antitrust Regulation empowers the Commission to impose fines of up to 10% of its total turnover in the preceding business year.
Note that the Commission's investigation into the tying of Windows and Internet Explorer was distinct from the antitrust case involving Microsoft which concluded in 2004 with a Decision finding that Microsoft had abused its dominant position and imposing fines. This case focused on interoperability between Windows and work group servers and on the tying of Windows Media Player to Windows (IP/04/382).