Microsoft’s failure for 14 months to honor its antitrust commitment...

company has violated legally binding conditions in an antitrust case, Competition Commissioner Joaquín Almunia said at a news briefing. The compliance failure will lead to heightened monitoring requirements in the future, he said. Microsoft declined to comment but we're told an appeal is considered unlikely. One antitrust attorney called the fine-setting process precedential. The company’s promise to give users a choice of browsers followed an EC antitrust investigation into the tying of Windows and Internet Explorer. Microsoft offered in 2009 to provide a screen allowing users to select their preferred browser, and the EC made that offer legally binding until 2014, it said. Wednesday’s decision found that the software maker had failed to roll out the browser choice screen with Windows 7 Service Pack 1 from May 2011 to July 2012. Fifteen million Europeans Windows users didn’t see the screen during that time, and Microsoft acknowledged that the screen wasn’t displayed then, the EC said. When the failure to comply was discovered in July 2012, the EC began a probe. Regardless of whether it was intentional or not, the breach “calls for a sanction,” Almunia said. Commitments are an important tool in the EU antitrust enforcement system, and the Article 9 decision used in this case can be a good way to resolve competition concerns quickly since they avoid long proceedings, he said. Article 9 lets the EC conclude an antitrust investigation by making legally binding commitments offered by the company, rather than Article 7, a longer process used to prohibit behavior and impose fines. The EC keeps track of compliance in some Article 9 cases by appointing a monitoring trustee who reports back to it, he said. Those trustees are generally not from the companies who made the competition commitments but in this case, for reasons Almunia said he can’t explain, Microsoft served as the trustee. He said the trustee was “magnificent.” Almunia has asked the competition directorate to be “extremely careful” from now on about how it designs the monitoring provisions of commitment agreements, he said. Asked whether this case might prompt changes to Article 9, Almunia said he’s not considering amending the measure, only the way it’s executed. The EC will be more precise in defining the responsibilities of the trustee and will pay better attention to the reports it files, he said. He'll send a clear message to possible candidates for Article 9 decisions to be very strict about how they monitor compliance with their commitment and how they set up their internal control mechanisms to prevent breaches. Because this was a breach of commitments rather than an antitrust violation, the EC isn’t bound by its fining guidelines, Almunia said. The penalty took into account the gravity of the noncompliance as well as Microsoft’s cooperation, he said. The amount represents 1 percent of the company’s annual revenues. “I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance,” he said. EC antitrust fines always carry a deterrence component, Jones Day (Brussels) competition partner Bernard Amory told us. If the EC hadn’t set a serious fine, it would have lost credibility, he said. Fining guidelines don’t apply to breaches of commitments, leaving no guidance on how to assess penalties in such cases, he said. “This is a precedent in that respect.”