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Originally published March 6, 2013 at 6:12 PM | Page modified March 7, 2013 at 11:23 AM

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EU regulator takes some blame as Microsoft hit with $731M fine

In a highly unusual mea culpa, the European Union’s top antitrust regulator said his department bore some of the responsibility for Microsoft’s failure to respect a settlement that landed the company a $731 million fine.

The New York Times

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BRUSSELS — In a highly unusual
mea culpa, the European Union’s top antitrust regulator said Wednesday his department bore some of the responsibility for Microsoft’s failure to respect a settlement that landed the company a
$731 million fine.

Joaquin Almunia, the competition commissioner, said the EU had been “naive” to put Microsoft in charge of monitoring its adherence to the deal it agreed to in 2009, when his predecessor let the company escape a fine in exchange for offering users of its Windows software a wider choice of Internet browsers.

But Almunia insisted the enforcement of settlements could be sufficiently strengthened to ensure that companies abide by their pledges, and he signaled he would not retreat from his goal to use such deals to avoid lengthy legal battles with major companies in swiftly evolving technology markets.

Settlements “allow for rapid solutions to competition problems,” Almunia said. “Of course such decisions require strict compliance” and the “failure to comply is a very serious infringement that must be sanctioned accordingly.”

Microsoft agreed to alter Windows for five years to give users of newly purchased computers in Europe a ballot screen that would allow them to easily download other browsers from the Internet and to turn off Microsoft’s own browser, Internet Explorer.

Microsoft told the commission at the end of 2011 that it had been abiding by the deal.

“We trusted the reports about the compliance,” Almunia said Wednesday.

In fact, the company had failed to include the ballot system in certain products starting in May 2011, affecting more than 15 million European users.

The lapse came to light last July after rival companies reported its absence.

“We take full responsibility for the technical error that caused this problem and have apologized,” Microsoft said Wednesday. “We have taken steps to strengthen our software development and other processes to help avoid this mistake — or anything similar — in the future.”

A Microsoft spokesman declined to comment on whether the company would appeal, but it seemed unlikely, as Microsoft prefers to focus on its rivalry with Google. It is among the companies that have complained about Google’s business practices to Almunia.

Almunia said some of the blame for Microsoft’s failure to adhere to the deal rested with regulators and indicated the commission might never again, in effect, put the fox in charge of the henhouse.

“Maybe we should have tried to complement the responsibilities of the reports about the implementation, but we only reacted when we received the first complaint,” Almunia said.

“Maybe in 2009 we were even more naive than today.”

He said the commission would be more inclined to use trustees to police future settlements, would be more precise in defining their responsibilities and would “pay even more attention to the reports that the monitoring trustees will send to us.”

Microsoft has been a special case in the history of EU antitrust enforcement, racking up a total of 2.26 billion euros ($3.4 billion) in fines over about a decade.

The latest decision was another milestone for EU antitrust law, and for Microsoft, which became the first company to be punished for failing to adhere to a settlement.

Almunia said there had been no indication Microsoft intentionally broke the settlement agreement.

The fact that nobody — apart, apparently, from rival companies — noticed the absence of the browser choice for more than a year has prompted critics of the European antitrust enforcement to question the effectiveness of the measure.

But Almunia insisted Wednesday that the remedy had been effective, saying that, “our decision was very relevant in opening the market and broadening the choice for users, for what kind of browsers they want to use.”

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