Update: Microsoft to appeal $1.3B EU fine

IDG News Service - Microsoft Corp. is appealing the $1.3 billion fine imposed on it by the European Union for failing to honor a 2004 antitrust agreement, the company said Friday.

Microsoft spokesman Jack Evans said via e-mail today that the company has filed an application with the Court of First Instance in Luxembourg to annul the European Commission decision of Feb. 27, which imposed the fine against Microsoft.

"We are filing this appeal in a constructive effort to seek clarity from the court," the company said in an e-mailed statement. Microsoft is not commenting further.

The Commission could not be reached immediately for comment Friday.

According to The Wall Street Journal, Microsoft's appeal only covers the imposition of the fine, not the underlying conduct. Since the company won't comment, it's impossible right now to know its reasons for filing an appeal.

Historically, Microsoft has resisted compliance with its EU antitrust ruling and has been reluctant to acknowledge its guilt in the case. However, some recent moves by the company to be more open about its technology practices and to release documentation for proprietary protocols to third parties seemed to indicate it has become more willing to comply with the ruling.

Thomas Vinje, a partner specializing in competition and intellectual property at Clifford Chance in Brussels, said he finds Microsoft's legal action surprising at a time when the company is trying to repair its "strained" relationship with EU antitrust officials. "Especially in light of its effective admission that it was seeking unreasonable fees for the information required to be disclosed by the European Commission, there really can be no doubt that Microsoft was refusing to comply with the European decision and that the Commission was correct to fine it for that refusal," he said in an e-mail.

Vinje added that it would be better for market competition and the industry overall if instead of initiating another court battle, Microsoft were to focus its attention on complying with the EU agreement. "Only then will Microsoft -- and the industry and software consumers -- be able to move on from this sorry saga," he wrote.

Microsoft finally came into compliance with its EU antitrust ruling -- which originally surrounded Microsoft's bundling of Windows Media Player into the Windows client OS -- in late October 2007. Microsoft had fought for several years to overturn the original ruling and imposed fine of then around $600 million, but lost its appeal in September 2007.

When the EU imposed the latest fine, which was for noncompliance up to Oct. 22, 2007, Microsoft said it would review the action. The February fine punished Microsoft for failing to license protocols for communicating with its software -- primarily its Windows OS -- to open-source developers at what the EC considered a fair price.