The Commission said it considers that Microsoft is now
complying with its obligations under that decision.
The European Commission ruled in 2004 that Microsoft had abused
its dominant market position by leveraging its near monopoly in the
market for PC operating systems onto the market for work group
server operating systems.
Work group server operating systems are operating systems
running on central network computers that provide services such as
file and printer sharing, security and user identity management.
Microsoft has a 95% market share on the desktop operating system
market, and in excess of 70% on the market for work group server
operating systems.
The Commission fined Microsoft €497 million and ordered the
company to disclose on reasonable and non-discriminatory terms the
information necessary to allow non-Microsoft work group servers to
achieve full interoperability with Windows PCs and servers.
Microsoft appealed that ruling to the Court of First Instance
(CFI). In September, the Court upheld the Commission's findings on
all significant points.
Microsoft issued a statement today: “At the time the Court of
First Instance issued its judgment in September, Microsoft
committed to taking any further steps necessary to achieve full
compliance with the Commission’s decision. We have undertaken
a constructive discussion with the Commission and have now agreed
on those additional steps."
"We will not appeal the CFI’s decision to the European Court of
Justice and will continue to work closely with the Commission and
the industry to ensure a flourishing and competitive environment
for information technology in Europe and around the world,” said
the statement.
According to a Commission statement, Microsoft has today agreed
to three substantial changes to bring the company into compliance
with the 2004 decision.
The Commission said: "First, ‘open source’ software developers
will be able to access and use the interoperability information.
Second, the royalties payable for this information will be reduced
to a nominal one-off payment of €10,000. Third, the royalties for a
worldwide licence including patents will be reduced from 5.95% to
0.4% – less than 7% of the royalty originally claimed."
In these agreements between third party developers and
Microsoft, Microsoft will guarantee the completeness and accuracy
of the information provided, according to the Commission. The
agreements will be enforceable before the High Court in London, and
will provide for remedies, including damages, for third party
developers in the event that Microsoft breaches those agreements.
Effective private enforcement will therefore complement the
Commission's public enforcement powers, it said.
"These changes mean that open source competitors to Microsoft
will be able to provide businesses with competitive, innovative
alternatives to Microsoft work group server products, knowing that
they are fully interoperable with Microsoft's Windows desktop
operating system," said the Commission. "
The Commission will now adopt a decision "as soon as possible"
on the pending non-compliance case regarding past unreasonable
pricing for the interoperability information.
Microsoft also has ongoing obligations to continue to comply
with the Commission's 2004 Decision. Should Microsoft fail to
comply with those obligations in the future the Commission can
issue a new decision to impose daily penalties.
Competition Commissioner Neelie Kroes said: “I welcome that
Microsoft has finally undertaken concrete steps to ensure full
compliance with the 2004 Decision. It is regrettable that Microsoft
has only complied after a considerable delay, two court decisions,
and the imposition of daily penalty payments. However, the measures
that the Commission has insisted upon will benefit computer users
by bringing competition and innovation back to the server
market."
Kroes said that the Commission will remain vigilant to ensure
that Microsoft continues to respect its compliance obligations and
does not engage in other anti-competitive behaviour.
"I have always said that open source software developers must be
able to take advantage of this remedy: now they can," she said.
Angelo Basu, a competition law specialist with Pinsent Masons,
the law firm behind OUT-LAW.COM, said Microsoft's capitulation will
remove the uncertainty that would have lingered had Microsoft
appealed to the European Court of Justice.
"Pending the appeal to the CFI, Microsoft took a tough line and
sought to extract terms for interoperability information at a much
higher rate than was acceptable to the Commission or competitors
and it might have been expected to carry on doing so pending a
further appeal which could itself have taken many years to come to
a final ruling," he said. "Now it appears that there will be clear
terms on which Microsoft will license its information so that
businesses can go back to developing and selling software rather
than fighting with Microsoft."
Basu said that it is possible that Microsoft's decision will
also send a signal to other IT businesses in dominant
positions.
"The settlement will have given the Commission renewed
confidence that it could take effective action against others who
were reluctant to share interoperability information or who put a
high price on it," he said.
