Microsoft could face daily fines of up to €4.2m

Microsoft could face daily fines of up to $5.5 million (€4.2 million) as the European Commission further tightens the screw on the US software group in the long-running antitrust battle between the two.

This threat of a possible increase in financial pressure, due to be announced on Wednesday, is likely to cap another torrid week for Microsoft in Brussels. The commission will next week issue a ruling that Microsoft has failed to comply with the regulator's landmark antitrust decision against the group from March 2004.

The group will be fined up to €2 million for each day it is found to have failed to met commission requirements, starting on December 15th, 2005.

The penalty, which will come on top of the record €497 million fine imposed on Microsoft two years ago, is likely to run into hundreds of millions of euro. In addition, the commission will raise the daily ceiling of €2 million for any future period of non-compliance, people familiar with the case said yesterday.

They refused to specify by how much, but under EU competition rules fines for non-compliance can rise to a maximum of 5 per cent of a company's daily turnover. For Microsoft, that would be about $5.5 million.

At the heart of the current dispute is the commission's allegation that Microsoft had failed to draw up "complete and accurate" technical information about its flagship product, the Windows desktop operating system. Under the terms of the 2004 ruling, that information has to be made available to rival companies so they can design server software compatible with Windows.

Microsoft insists it has done enough to satisfy the ruling, although in an attempt to address the commission's concerns Microsoft is engaged in a last-gasp effort to improve the documentation it has supplied.

"Microsoft is dedicating massive resources to meeting the aggressive timeline and high quality standard set by the commission. In the light of Microsoft's current compliance efforts, we consider any fines to be unnecessary and unjustified," the group said yesterday.

Microsoft's efforts are, however, unlikely to stave off the new fines. The precise level of the fines has yet to be determined and will be communicated to national competition authorities in a closed meeting on Monday.

A spokesman for Neelie Kroes, EU competition commissioner, said: "If the commission were to impose penalty payments next week, it would sincerely hope it would be the last time. The best outcome would be for Microsoft to comply as quickly as possible."