Facing $613 Million EU Fine, Microsoft Still Wants To Settle

With a $613 million fine about to be leveled by the European Union against Microsoft, the software company has given up trying to influence the EU's commissioners and, instead, has approached several antitrust authorities in individual nations in a last-ditch attempt to settle the case.

While Competition Commissioner Mario Monti has been upping the ante against Microsoft in recent weeks, the case will begin to move out of his hands on Wednesday. That's when the full EU commission is scheduled to vote on the case before officially announcing the fine and proposing remedies to Microsoft's behavior. The $613 million figure is at least twice the amount that had been bandied about in recent weeks.

A new twist came to light in advance of the official announcement: Microsoft has been complaining that the fine is too high because it addresses Microsoft's business in the U.S. In a statement, Microsoft's lead European legal counsel, Horacio Gutierrez, said: "We believe it's unprecedented and inappropriate for the Commission to impose a fine on a company's U.S. operations when those operations are already regulated by the U.S. government and the conduct at issue has been permitted by the Department of Justice and a U. S. Court."

The Wall Street Journal reported that several national competition authorities said they had received details on the settlement offer that Microsoft had made to the Competition Directorate, which rejected the offer. Monti has decided to seek a legal precedent, as well as modification of Microsoft's future business practices. The Journal quoted one national antitrust official, who said: "There might be further discussions with the commission [about a settlement] after the decision."

Microsoft has attempted to settle the case for months, as its lawyers took part in marathon negotiating sessions with EU officials in an attempt to work out a settlement. Microsoft reportedly had offered concessions in all the major points of contention--unbundling operating-system software for audio/video and servers, primarily--but Monti wanted Microsoft to agree to future changes in business behavior that the software giant said it couldn't live with.After the two sides narrowly missed reaching a settlement last week, Microsoft's chief executive, Steve Ballmer, said: "We made every possible effort to settle the case, and I hope that perhaps we can still settle the case at a later stage."

Microsoft has said it will appeal the decision. The appeals process, which could take as long as five years, will begin at the Luxembourg-based Court of First Instance. Later, the European Court of Justice could get involved. While the stakes are undeniably high for Microsoft, the EU has some incentive to settle the case, too. The Competition Directorate has lost some embarrassing cases in recent months on appeal, and it would not want to suffer another loss.