Microsoft faces tougher EU fines

— 3:00 PM on July 10, 2006

Last month, the Financial Times reported that the European Commission was planning to issue a new ruling against Microsoft that could force the company to pay daily fines of up to €2 million ($2.54 million). The Commission has now turned up the heat and will fine Microsoft up to €3 million ($3.82 million) a day if it continues to defy a 2004 ruling, a diplomatic source tells Reuters. Additionally, the European Union's executive arm plans to announce on Wednesday a new fine in the neighborhood €400 million ($509.68 million) for Microsoft's deemed non-compliance over the past two years. As we reported previously, the 2004 ruling ordered Microsoft to provide documentation to its competitors in order to allow them to make software interoperable with Windows, but the Commission believes Microsoft hasn't fulfill this demand adequately.

According to Reuters, the European Commission can impose fines of up to 5% of a company's average daily turnover for the previous year. Microsoft's daily turnover was $110 million in 2005, therefore the fines could theoretically go up to $5.5 million a day.

Microsoft has already taken steps to avoid such fines. Only July 18, the company will submit the last piece of documentation required by the 2004 ruling. An appeal trial was also held in April, during which Microsoft argued that the Commission had made "fundamental errors of fact and reasoning" in its ruling. In both cases, however, Reuters says it should take months for the Commission to come to a definite conclusion.
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