Will Europe Punish Microsoft Sufficiently?

The time is near for Microsoft (NASDAQ:MSFT) to pay up the fine in the European Union after breaking a deal to offer various browsers in all versions of Windows. The issue began in late 2009 when Opera Software, the maker of the Opera web-browser, made a complaint to the European Commission that Microsoft was manipulating the market by tying its own browser, Internet Explorer, to the Windows operating system.

The Commission regulators agreed and forced Microsoft to offer options for users to install various browsers when they set up their computers. For the most part, Microsoft followed the agreement.

But Windows 7 Service Pack 1, one of the company’s latest systems at the time, apparently didn’t prompt users to select a browser, thus forcing Internet Explorer on them and breaking the agreement with the European Commission.

Microsoft claimed the lack of the selection prompt was a “technical error” and due to oversight by an engineering team, but the Commission went ahead with an investigation and filed formal charges against the company in October of last year.

Microsoft could face a fine of $9 billion if the Commission employs the maximum penalty of 10 percent of revenue for the time it was breaching the agreement. However, Robert Lande, professor of law at the University of Baltimore and the director of the American Antitrust Institute, said he didn’t believe the Commission would enact the maximum penalty.

Lande spoke critically of Joaquin Almunia, the Commission’s top official, saying he was too lenient. Microsoft paid $5 billion in a U.S. settlement in 2001, and Lande said he believed that didn’t change Microsoft’s behavior. Lande said Almunia would likely move for a settlement with the company, which would bring the fine down significantly.

Such a move may trivialize the European Commission, leaving Microsoft and other companies to pay little heed to the law in the future. The announcement of the fine is expected Wednesday and could have a significant impact on the future of corporate cooperation with the European Commission.

Copyright Wall St. Cheat Street. All rights reserved.