On 6 March 2013, the European Commission imposed a €561 million fine on Microsoft for not complying with its commitments to offer users a browser choice screen; these commitments had been rendered legally binding by the Commission decision of 19 December 2009. The Commission noticed that, between May 2011 and July 2012, the screen had disappeared from one of the versions of Windows.
When the EU Commission decides to pursue an antitrust case, it can follow one of two main paths: a prohibition decision under Article 7 of Regulation 1/2003 or a commitment decision under Article 9.
Under Article 7, the Commission is empowered to adopt a decision that prohibits an illegal agreement such as a price cartel or an abuse of a dominant position, and can impose sanctions. The Commission may impose a fine of up to 10% of the company's total turnover in the preceding business year.
Under Article 9, a company under investigation can proactively offer commitments before the Commission establishes an infringement. If the pledges are strong enough to allay its concerns, it may decide to stop the investigation and make them legally binding through a so-called “Article 9 Decision”.
Such decisions do not involve imposition of a sanction.
However, an Article 9 Decision legally binds the company concerned to comply with its commitments. If a company breaks such commitments, Article 23 (2) of Regulation 1/2003 empowers the Commission to impose fines of up to 10% of its total turnover in the preceding business year.
By its decision of 19 December 2009, the European Commission rendered, as legally binding, commitments offered by Microsoft to boost competition in the web browser market. They aimed at offering European users of Windows a choice between different web browsers and at allowing computer manufacturers and users the option to turn off Internet Explorer.
In the course of its investigation, the Commission stated that competition was distorted by Microsoft tying Internet Explorer to Windows. It gave Microsoft an artificial distribution advantage, not related to the merits of its product, on more than 90% of personal computers. Furthermore, this tying hindered innovation in the market and created artificial incentives for software developers and content providers to design their products or websites primarily for Internet Explorer.
In order to address the Commission's concerns about the tying of Internet Explorer to Windows, Microsoft committed to offer European users of Windows a choice between different web browsers and to allow computer manufacturers and users the option to turn off Internet Explorer by the setting-up of a "ballot screen" in the Windows PC operating system, from which consumers could easily choose their preferred internet browser. The commitments were legally binding for a period of five years.
On 6 March 2013, the Commission imposed a €561 million fine on Microsoft for not complying with those commitments. The Commission noticed that, between May 2011 and July 2012, the screen had disappeared from one of the versions of Windows.
There are several ways of monitoring companies to ensure they keep their pledges. The Commission usually trusts the companies’ reporting obligations and the vigilance of other market players. When needed, the Commission can also use an independent trustee to help it verify the correct application of the commitments.
In the Microsoft case, because the commitments were straightforward, the monitoring of their implementation was entrusted to the company itself, which was obliged to report to the Commission.
At first, Microsoft complied and users responded well. According to the Commission, 84 million browsers were downloaded via the choice screen between March and November 2010.
But then, between 1 May 2011 and July 2012, the screen disappeared from Windows 7. In this period, over 15 million users were deprived of the choice and ease-of-use it offered. Microsoft acknowledged that the choice screen was not displayed during that time.
When the Commission noticed that the screen was no longer displayed, it re-opened a formal investigation, which concluded that Microsoft had breached its commitments. It decided to fine the company for non-compliance with the 2009 decision.
It is the first time that the Commission had to sanction a breach of legally binding commitments.
In the calculation of the fine, the Commission took into account the gravity and duration of the infringement, the need to ensure a deterrent effect of the fine and, as a mitigating circumstance, the fact that Microsoft had cooperated with the Commission and provided information which helped the Commission to investigate the matter efficiently.
Following the adoption of its decision, the Commission expressed its intention to monitor companies more closely over the compliance of commitments. It intends to be stricter in the design of the monitoring tools. Self-monitoring might not be an option in the future.
It is worthwhile noting that, when the matter emerged, Microsoft immediately owned up to the facts. It explained that the failure to display the choice screen was due to a technical problem. Microsoft duly cooperated with the Commission during the investigations. However, the Commission considers that, intentional or otherwise, a breach of commitments ought to be sanctioned. A zero tolerance policy was applied.
