Europe Opens New Microsoft Inquiry

Microsoft immediately apologized, calling it a technical problem it had learned of only recently. “We deeply regret that this error occurred and we apologize for it,” the company said ina statement .

But the software giant could nonetheless face a substantial fine for breaching the Europe Union’s antitrust rules by defying the terms of a settlement.

“If the infringements are confirmed, there will be sanctions,” said Joaquín Almunia, the European Commission official in charge of antitrust enforcement. He vowed to use “legal instruments with all my capacity to deter and to punish.”

The confrontation is a setback of sorts for the commission, the European Union’s executive agency, which has been trying to find non-litigious solutions to antitrust problems, particularly in the fast-moving technology field, to prevent cases from dragging on for years.

Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about the company’s dominance of the Internet search and advertising markets. The resumed compliance struggle with Microsoft, some legal experts said, could harden his position with Google.

Mr. Almunia’s announcement “sounds like a warning to Google and to other technology giants in the commission’s line of fire,” said Nicolas Petit, a law professor at the University of Liège in Belgium. It shows that “settling a case is not the end of the story” and that companies must follow up with “effective monitoring mechanisms.”

Mr. Petit pointed out that more than a year and a half went by in the case announced Tuesday before other companies in the sector reported the problem and the commission took action, “which suggests that this approach just did not work” because “no one noticed.”

In announcing the action on Tuesday, Mr. Almunia said Microsoft committed a serious breach of E.U. antitrust rules by not complying with commitments the company made in 2009 as part of the settlement. Those sanctions, he added, could be particularly severe because, if confirmed, this would be the first time a company had defied an antitrust settlement offered by the commission.

The potential fine could be up to 10 percent of a company’s global annual revenue. In Microsoft’s case that could mean a penalty of $7 billion, but it is probably unlikely to reach that level. The largest single fine ever levied by the European antitrust authorities was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing ruling.

The issue on Tuesday stems from the settlement of a case concerning Microsoft’s dominance in Internet browsers.

In Microsoft’s 2009 settlement, the company did not pay a fine but instead committed to installing a system called Browser Choice Screen with Windows to offer users alternatives like Chrome and Firefox to counter the strength of Internet Explorer, Microsoft’s own browser product.

On Tuesday, Microsoft blamed “a technical error” for not offering users the choice of browsers it had promised. The error affected 28 million personal computers running Windows 7 SP1, the company said in a statement.

The company said it only learned recently of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers.

Microsoft also said it took immediate steps to resolve the issue, and said it would send all affected users’ computers a software update by the end of this week allowing users to choose a browser other than Explorer.

“We have fallen short in our responsibility,” Microsoft said in a statement. “While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it.
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