EU ready to fine Microsoft in effort to coerce compliance

The European Commission is due to fine Microsoft on Wednesday as part of a hard-line approach to getting the software giant to comply with anti-trust sanctions that appears to be bearing fruit.

The extent of Microsoft's new-found cooperation in the face of a penalty that is likely to reach hundreds of millions of euros is impressing even the Americans, until now highly critical of Brussels's approach.

US justice department lawyer Renata Hesse conceded in May that the American approach - which has not relied on coercion - had failed to accomplish as much in five years, more than twice the time since Europe ruled in 2004 that the firm was exploiting a near-monopoly.

"They're obviously further along at this point than we are," Ms Hesse told a US court in reference to the European method.

For the European Union executive, the policy is quite clear.

"If people are not . . . conforming [ with] our regulations, our rules, then it needs to be corrected," EU competition commissioner Neelie Kroes said late last week. She said she could not imagine that Microsoft would avoid a fine when the Commission met this week.

The European Commission will reveal on Wednesday the size of its fine. It will be set at up to €2 million a day, backdated to December 15th, 2005 and extending to some time before Wednesday. The fine's dimensions will be endorsed in a closed meeting of the 25 EU countries on today.

Brussels's tough new penalty is on top of €497 million in fines the Commission already imposed in its landmark antitrust decision against Microsoft in March 2004.

After years of investigation, the Commission found that Microsoft used near-monopoly power from its Windows operating system to harm competitors making "work group servers", which run printing and sign-on services on office networks.

The Commission ordered Microsoft to give rivals the information needed so their work group servers could compete on a level playing field with Microsoft's own. Microsoft must help its rivals interconnect smoothly with Windows.

Microsoft was supposed to ready the information for competitors by June 2004. The company tried to have the sanctions suspended until it could complete a court challenge to the 2004 decision, but late that year a judge said no.

In the Commission's view, Microsoft moved too slowly. Finally it threatened the software giant with daily fines in December 2005, and within months Microsoft agreed on a plan.

A Microsoft spokesman rejected the idea that the company had dragged its feet. "Microsoft has done everything that the Commission has ever asked of it," he said.