The European Union fined Microsoft Corp 561 million euros ($731 million) on Wednesday for failing to offer users a choice of Web browser, an unprecedented sanction that will act as a warning to other companies involved in EU antitrust disputes.

It said the US software company had broken a legally binding commitment made in 2009 to ensure that consumers had a choice of how they access the Internet.

In 2009, Microsoft Corp agreed to pay 860 million euros and promised to give Windows users the option of choosing another browser rather than having Internet Explorer automatically installed on their machines.

But Microsoft failed to stick to the deal for some 15 million installations of Windows 7 software in Europe from May 2011 to July 2012. The company admitted the failure last year, adding that it was a mistake.

It is the first time the European Commission, the EU's anti-trust authority, has handed down a fine to a company for failing to meet its obligations.

While the sanction is sizeable, representing more than 11 percent of Microsoft's expected net profit this quarter and 1 percent of annual sales, the commission could have charged the company up to 10 percent of annual global revenue.

The world's largest software company can easily pay the fine out of its $68 billion in cash reserves. It holds $61 billion of that outside the United States, much of it in Europe, to take advantage of low tax rates.

Microsoft shares fell 0.9 percent to $28.09 on Nasdaq.

Role model

The commission's top competition regulator, Joaquin Almunia, said at a news conference in Brussels on Wednesday that the fine reflected the size of the violation and the length of time it went on for. It was also intended to make an example of Microsoft and deter other companies from doing same thing.

"A failure to comply is a very serious infringement that must be sanctioned accordingly," Almunia said.

Keith Hylton, a professor of law and an antitrust specialist at Boston University, said the fine was "far in excess of any benefit Microsoft could have gotten from the error, and vastly in excess of any harm to EU consumers, who are all aware of alternatives to Internet Explorer".

In all, Microsoft has now paid 2.2 billion euros in fines to the commission since 1998, when regulators opened their first investigations into the company after Sun Microsystems complained it had been denied access to technical documents.

Over the years, the EU has broadened its investigation to include whether Microsoft had abused Window's near-monopoly over the market for computer operating systems to corner other markets, including server software, streaming media software, and Internet browsers.

Reuters-AP

(China Daily 03/08/2013 page11)