Microsoft faces EU fine for breaking its pact

Microsoft is set to be hit with a fine running into hundreds of millions of dollars by Brussels on Wednesday over its failure to keep to a high-profile competition agreement with European regulators, according to people familiar with the case.

The rare penalty comes as the US software group is also fighting Danish tax authorities over a claim of up to $1bn, including penalties for late payment of taxes that reach back nearly a decade.

The European fine represents an unprecedented penalty against a company for failing to stick to a voluntary pact with antitrust regulators, and is seen as a test of how vigorously Joaquín Almunia, EU competition commissioner, will seek to enforce such settlements.

Microsoft admitted last year that it had failed to live up to a deal reached with Brussels in 2009 to end a long-running investigation. As part of the settlement, it had promised to offer buyers of new PCs in Europe a choice of internet browser, rather than making its own IE browser the default choice.

However, the company later admitted that it failed to display the ballot screen offering the choice of browsers to many customers, and blamed the lapse on a technical error associated with a 2011 software upgrade.

The failure prevented an estimated 28m Europeans being given the choice of browsers, as Brussels had intended.

Although Microsoft has already paid about €1.6bn in fines in Europe over antitrust issues in the past decade, the penalty for failing to keep its word in a voluntary agreement marks a new low point.

The black eye from the lapse was severe enough to be cited by the company’s board as one of the reasons for giving Steve Ballmer, the chief executive, only half the bonus he would otherwise have been due last year.

:story: Financial Times