Record fine for Microsoft over non-compliance with binding commitments

17 June 2013

Victoria Moorcroft

In the first case of its kind, the European Commission announced on 6 March 2013 that it had levied a EUR561 million fine against Microsoft, for its failure to comply with binding commitments it gave to the European Commission in 2009.  

Microsoft was required by its commitments to provide a 'choice screen' on the first loading of its operating systems, which would allow users to choose from a selection of internet browsers (as alternatives to Microsoft's own Internet Explorer).  Microsoft failed to display this choice screen during the rollout of Windows 7, which Microsoft blamed on a technical error. 


Microsoft's Commitments

In 2008, the Commission began a formal investigation into allegations of anti-competitive behaviour by Microsoft.  

Microsoft was purportedly leveraging its dominant market position in the operating system market by tying in with Internet Explorer, the sole web browser in its Windows licence.

This tying was alleged to have given Microsoft an artificial distribution advantage which was not linked to the quality of its products, and furthermore to have incentivised software developers to target their products solely or largely at compatibility with Internet Explorer.


Under Article 9 of Regulation 1/2003, the Commission is able to accept legally binding commitments to remedy any potentially anticompetitive behaviour. Commitments were offered by Microsoft following the Commission's Statement of Objections, and were made binding in December 2009.  

As part of those commitments, Microsoft agreed that it would provide, from March 2010, a "Choice Screen" when the Microsoft operating system first loaded, which would enable consumers to choose their browser from a selection of available browsers. Additionally, Microsoft would provide regular update reports to the Commission.


Falling Short of its Requirements

In July 2012, the Commission announced that it was opening proceedings against Microsoft to investigate whether it had complied with its commitments.

Shortly after this announcement, Microsoft issued its own statement acknowledging that it had fallen short of its requirement to display a Choice Screen during the rollout of Windows 7.  

It blamed this on a technical error, and said that it had taken immediate steps to remedy the problem as soon as the issue was brought to its attention.

Ultimately, the Commission decided that Microsoft failed to offer the browser Choice Screen during its roll out of Windows 7 Service Pack 1 between May 2011 and July 2012. The result was that some 15 million users in the EU did not have the option which Microsoft had promised to offer.

This is against the backdrop of the fact that, when the Choice Screen was operational, for example between March 2010 and November 2010, it was extremely successful, with some 84 million users using it to download alternative browsers.


Record Fine

The Commission imposed a record fine on Microsoft of EUR561 million. Commission Vice President Almunia was quoted in the press release, stating that the availability of commitments is crucial to antitrust enforcement, because they "allow for rapid solutions to competition problems… [A failure to comply] is a very serious infringement that must be sanctioned accordingly".

The Commission stated that the fine took into account the gravity and duration of infringement, but also Microsoft's co-operation and provision of information. Almunia stated that the aim was to "make companies think twice before they even think of intentionally breaching their obligations or neglecting their duty to ensure strict compliance."

The decision highlights the seriousness with which the Commission will break a breach of binding commitments. In particular, the Commission seemed keen to stress that they are not an 'easy way out' of antitrust judgments.