Microsoft threatened with fines of €2m a day

Microsoft was yesterday threatened with fines that could rise to €2m (£1.4m) a day as the European Commission escalated a confrontation with the world's largest software makers over a landmark competition ruling.

In a sharply worded statement the European Competition Commissioner, Neelie Kroes, said she had "given Microsoft every opportunity to comply with its obligations", adding that she had "been left with no alternative other than to proceed through the formal route to ensure Microsoft's compliance".

The company, which last night said it would contest the case, has five weeks to prove it was in compliance with EU demands that it provides technical information to competitors to allow them interoperability with Windows PCs and servers.

Fines totalling €2m a day hang over Microsoft, though that figure could be reached only if it is found to have breached rules on royalties as well. Any fine for failing to comply with the information requirement only would "be less than €2m per day", the Commission said, though this would be backdated to 15 December.

The US-based corporation hit back with a statement describing the Commission's action as "unjustified", adding that objections from the European competition authorities refer to "technical documentation we submitted last week, even though by its own admission neither it nor the Trustee have read or reviewed these documents".

It added: "Every time we make a change, we find that the Commission moves the goalpost and demands another change." Microsoft said it intends to exercise its right to contest the charges at an oral hearing.

In March 2004, the Commission ruled Microsoft had abused its global dominance by using its near monopoly in the market for PC operating systems and for media players to the disadvantage of its rivals. Record fines of €497m were imposed and Microsoft was forced to sell a version of Windows without the Media Player software used to watch films.

The issue at present is a part of that decision requiring Microsoft "to disclose complete and accurate interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers".

The Commission's view, which it says is supported by two reports from a Monitoring Trustee appointed by mutual agreement, is that specification provided by Microsoft are "incomplete and inaccurate". It quotes from the report of the Monitoring Trustee which says that the documentation "appears to be fundamentally flawed in its conception and in its level of explanation and detail". It adds: "Overall the process of using the documentation is an ... ultimately fruitless task."

Jonathan Todd, a spokesman for the Commission, said the information requirement was restricted to protocols and not source codes, so that the company's intellectual property rights would be protected.