EU Judges Asked To Toss Out Microsoft Fine
The record antitrust fine levied against Microsoft Corp. by the European Commission
should be tossed out, or at least greatly reduced, because the punishment outweighed
the infraction, company lawyers said Friday.
Commission lawyers said that to throw out the fine, or even reduce it, would
impede regulators' ability to keep a level playing field in the world of business.
"What is left to provide deterrents?" commission lawyer Fernando
Castillo de la Torre said, adding the amount of the fine was "proportionate
to the gravity of the infringement."
In 2004, the commission ruled that the world's largest software company had
to pay a 497 million euro ($613 million) fine, share information with rivals
and produce a version of its Windows operating system without Media Player software.
Speaking before the 13-judge panel of the Court of First Instance on Friday,
Microsoft lawyer Ian Forrester said the amount was far too much because the
company did not knowingly take advantage of its dominance.
"No fine should have been imposed because Microsoft committed no wrong,"
he told the judges in what was likely the last day of a five-day hearing about
the ruling that the company had abused its position in the operating systems
Instead, he said the commission decided to levy the fine to draw media interest.
"The largest fine in history would make for large headlines," he
said, adding that the court should annul it completely or, at the very least,
"significantly reduce it."
The previous record fine issued by the EU was 462 million euros against Swiss
pharmaceutical company Roche Holding AG in 2001 for price-fixing in the vitamin
While a court decision is not due for months, a ruling backing the commission
could force Microsoft to change the way it does business in the future and endorse
the EU's ability to hold back aggressive corporate behavior.
Earlier in the hearing, Forrester told the judges that the 2004 ruling effectively
meant that the company was "being told to give a worldwide license in perpetuity"
to its rivals that included its trade secrets and copyrights.
Doing that, he added in his summation Friday, would let the company's rivals
create a similar product and take away from its competitiveness.
But Anthony Whelan, a lawyer for the commission, said the case was about enabling
companies to compete in a fluctuating market where innovation drives changes.
"It is not an ordinary case. It is exceptional in many ways," he
said, adding that Microsoft entered the server market later than its rivals,
such as Novell Inc. and Sun Microsystems Inc., and became dominant by denying
"repeated requests" for information to keep rivals' products compatible
with its own.
"Competitors are denied interoperability who have concrete innovation
to offer their customers," Whelan said.
The hearing began Monday centering on Microsoft's bundled Media Player. Later
in the week, it focused on a challenge to the order Microsoft give information
to rivals to make its server software work more smoothly with the ubiquitous
Windows operating system.
Judge John D. Cooke, in a terse exchange with Whelan on Thursday, asked whether
Microsoft's proprietary information should be given away to its rivals, including
"The information which forms interoperability is hugely valuable commercial
information ... that's why it's difficult to understand the attitude of the
commission that these are mere trade secrets," the judge said _ a reflection
of Microsoft's assertion that to give over the code would be forfeiting the
hundreds of years in manpower that went into devising it.
Cooke, who will write the draft ruling, wanted to know if "competition
rules require that be taken away from Microsoft, conveying a huge commercial
Whelan said the value Microsoft placed on the code was merely a reflection
of the amount of time and effort it had put into creating it, nothing more.
The commission has never asked Microsoft to open up its source code -- the
recipe for Windows -- but Microsoft offered earlier this year to grant some
access to rivals under certain conditions if it would appease both EU and U.S.