Microsoft to appeal EU fine

The software giant will appeal its fine for failing to comply with the 2004 EC antitrust ruling

Microsoft is to appeal in the European courts against the European Commission's decision to fine it €280.5m, one of Microsoft's top lawyers announced on Wednesday afternoon.

"We have great respect for the EC, but we don't believe the magnitude of the fine is appropriate. We are appealing the decision in the European courts," said Microsoft's general counsel Brad Smith. "I can't say we're happy about the fine," Smith added.

The European Commission announced on Wednesday morning that it had fined Microsoft €280.5m for failing to comply with the 2004 antitrust ruling, under which Microsoft was ordered to release protocols allowing its rivals to develop server software that is fully interoperable with Windows.

Under EC legal rules Microsoft has two months and 10 days to file an application for an annulment of the ruling on the fine.

Microsoft will be appealing on the grounds of lack of clarity, and will argue that it was not clear what it had to do to avoid the fine.

"We do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission's original decision," said Smith.

"If a government authority imposes a fine, then it has an obligation to be clear about what it wants done. This is about whether the [EC documents requesting information] were written in the right way," said Smith at a telephone press conference.

Microsoft will also claim that it has acted in good faith.

"Every time we've been asked to do something [by the EC], we've done it," said Smith. "The purpose of a fine is to get something done, and we didn't need a fine to do this," said Smith, who claimed a team of 300 is working "round the clock" to provide the documentation.

Smith also said he was "disappointed the EC issued a decision before the deadline has arrived" for turning over Microsoft protocols, which he claimed is "two weeks away".

"The deadline is in two weeks. It's difficult to understand why the Commission is rushing to grade our homework," said Smith.

Smith said that half of the protocols had been finished, and that the date for handing in the new protocols and revised drafts is 18 July.

The EC announced on Wednesday that it would fine Microsoft €1.5m a day for failing to comply with the 2004 antitrust ruling, backdated to 16 December, 2005. It will rise to €3m per day from 19 July, if Microsoft doesn't satisfy the Commission.

"The fine is at a substantial level to induce Microsoft to comply. They have to behave," said competition commissioner Neelie Kroes at a press conference.

She added that this is the first time the EC has had to fine a company for failure to comply with an antitrust decision, and that Microsoft may suffer some damage to its reputation as a result of the ruling.

"It's not just a fine, but [the effects] on image and reputation they are scared of," said Kroes.

Microsoft responded by saying it had "a duty to comply".

"We do care deeply about our relationship with the Commission, and with governments and customers in Europe. I do think it's right to say it's not just about the fine — we have a duty to comply," said Smith.