The European Commission has threatened further big fines
against Microsoft for not complying with the Commission’s March
2004 antitrust judgement.
The Commission says Microsoft has again failed to adequately
share information with rivals concerning the protocols of its
workgroup servers.
Microsoft had to disclose complete and accurate interface
documentation on "reasonable and non-discriminatory terms",
allowing non-Microsoft work group servers to interoperate with
Windows PCs and servers.
The Commission’s preliminary view is that “there is no
significant innovation in the interoperability information”
provided so far, and it has rejected 1,500 pages of submissions by
Microsoft from December 2005 onwards.
The Commission says the prices proposed by Microsoft for the
information are “unreasonable”.
Microsoft has four weeks to reply to the Commission, after which
the Commission may impose a daily penalty for failure to comply
with the March 2004 decision.
As well as the original anti-trust fine in 2004, Microsoft was
fined for a second time for not complying last year.
The issue of whether the interoperability information is
actually complete and accurate is still under consideration by the
Commission.
Competition commissioner Neelie Kroes said, “Microsoft has
agreed that the main basis for pricing should be whether its
protocols are innovative. The Commission's current view is that
there is no significant innovation in these protocols. I am
therefore again obliged to take formal measures to ensure that
Microsoft complies with its obligations.”
Microsoft general counsel Brad Smith said, “Microsoft has spent
three years and many millions of dollars to comply with the
European Commission’s decision. We submitted a pricing proposal to
the Commission last August and have been asking for feedback on it
since that time.
"We’re disappointed that this feedback is coming six months
later and in its present form, but we’re committed to working hard
to address the Commission’s statement of objections, as soon as we
receive it.
He said, “We have a different perspective on the underlying
facts and the proposed findings. We believe we have been fair in
setting proposed protocol prices, and an analysis by
PricewaterhouseCoopers found that our proposed prices were at least
30% below the market rate for comparable technology.”
Microsoft provides two separate licensing arrangements to
companies wishing to obtain the interoperability information.
The first is a "No Patent Agreement", allowing licensees to use
the protocols which together comprise the interoperability
information, but without taking a licence for patents which
Microsoft claims necessary, a claim disputed by some third
parties.
The second (the "All IP Agreement") combines this first licence
with a licence for these disputed patents. Companies therefore have
a choice of agreement, depending on whether they consider they need
a patent licence.
Both licences confirm that an assessment of the reasonableness
of Microsoft's prices depends on whether there is innovation in the
protocols, and, if there is, what is charged for comparable
technologies in the market.
For both licences, Microsoft divided the protocols into Gold,
Silver and Bronze price categories based on the claimed degree of
innovation. Microsoft has already agreed that there is a fourth
category of protocols, not necessarily innovative, for which there
will be no royalty.
The Commission's preliminary view is that there is virtually no
innovation in the 51 protocols in the 'No Patent Agreement' where
Microsoft has claimed non-patented innovation, and that Microsoft's
current royalty rates for this agreement are therefore
unreasonable.
The Commission has also taken the preliminary view that
Microsoft's current royalty rates for its 'All IP Agreement' are
also unreasonable.
Related article:
Microsoft sweats over EU fine
European Union press release:
http://www.eurunion.org/news/press/2006/20060016.htm
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