The Commission has imposed a €561 million fine on Microsoft for having breached a binding (Article 9) commitments decision, agreed with the Commission in December 2009 in order to address concerns over its browser tying practices.  Although the Commission has accepted Article 9 commitments in a number of cases, this is the first time it has imposed a fine on a company for breach of such a decision. The level of the fine reflects the duration and gravity of the breach but most importantly the need for a deterrent effect in order to avoid similar breaches in other commitments cases.  The Commission is increasingly relying on commitment decisions as an enforcement tool in competition cases, in particular in the context of alleged abuse of dominance cases, as they allow for a rapid solution which ultimately benefits consumers. The Microsoft fine sends a clear signal that the Commission will not tolerate a failure to comply with such commitments.

Background

In January 2008 the Commission opened formal proceedings against Microsoft for a suspected abuse of a dominant position in relation to its practice of tying Microsoft Internet Explorer web browser to its Windows operating system.

Without admitting the abuse, Microsoft offered commitments under Article 9 of Regulation 1/2003 (the EU antitrust enforcement Regulation) in order to address the Commission's concerns.   Microsoft agreed, amongst other things, to introduce a "Choice Screen", populated with the 12 most widely used web browsers, giving users the opportunity to choose whether and which competing web browser to install.  Microsoft agreed to provide the Commission with regular reports on the implementation of the commitments.

Following a number of complaints that the Choice Screen was not being displayed on some computers, the Commission opened an investigation in July 2012 into a possible breach by Microsoft of this particular commitment.  As soon as it was alerted to the issue, Microsoft acknowledged that it had fallen short of its requirement to display a choice Screen on all Windows PCs in Europe where Internet Explorer is the default browser.  Microsoft stated this was due to a technical error and that it had taken immediate steps to address the issue.

The Commission Decision

The Commission has now concluded that Microsoft had failed to roll out the browser Choice Screen with its Windows 7 Service Pack1 from May 2011 until July 2012, affecting 15 million Windows users.  This was a clear breach of the binding commitments which were agreed between the Commission and Microsoft in December 2009, irrespective of whether it was intentional or not.

Under Article 23(2) of Regulation 1/2003, the Commission has the power to impose fines for breach of Article 9 commitments of up to 10% of the company's worldwide turnover in the preceding business year. The €561 million fine imposed on Microsoft amounts to around 1% of its turnover.

Following the announcement of the Commission's decision, Commissioner Almunia issued a statement in which he highlights the importance for companies to comply with commitments agreed with the Commission.  Mr Almunia has also indicated that the Commission will now review its practices relating to the monitoring of binding commitments, for example by giving a greater role to monitoring trustees.  It is unlikely that, in future, the monitoring of binding commitments will be left to the companies themselves as has been the case until now.

Article 9 Commitment Decisions

Under Article 9 of Regulation 1/2003, the Commission can accept binding commitments from companies that are suspected of having breached competition law, in order to address its concerns and subsequently close its investigation without making a finding as to whether or not there has been an infringement of the competition rules.

The Commission has made wide use of the Article 9 commitment procedure (in 29 cases so far), in particular in the context of potential abuse of dominance cases, where it has allowed the Commission to bring the relevant practices to an end without the need for lengthy and detailed investigations, thereby achieving prompt redress for consumers.

Recent cases that have been resolved under the commitments procedure include the distribution of e-books, an alleged abuse of dominant position by Thomson Reuters in relation to real time data feeds instruments and an alleged abuse of dominant position by Standard & Poor's in respect of prices charged for the distribution of US International Securities Identification Numbers (ISINs) to banks and information services providers in the EEA.  The Commission is currently also negotiating suitable commitments with Google in the context of an investigation into an alleged abuse of dominance, in order to address a number of areas of potential competition concern arising from Google's practices.