Tuesday, 18 September 2007

Microsoft fined for a record amount

Microsoft was left reeling yesterday after a bruising defeat at the hands of European judges who upheld a record fine on the software giant for abusing its dominant market position to crush competition. Microsoft executives said that they would comply with the European Commission’s demands to open up their products to greater competition, but vowed to study the 248-page judgment before deciding whether to appeal.

The judges in Luxembourg supported a fine of €497 million (£345 million) and confirmed the Commision’s ruling that by bundling up Windows Media Player with its Windows operating system, Microsoft had damaged rival media players’ ability to compete. They also upheld an order by the Commission in 2004 that Microsoft supply technical information to other companies, such as Sun Microsystems, so that they can make their servers compatible with Windows-based software.

Neelie Kroes, the Competition Commissioner, said: “Microsoft cannot abuse its Windows monopoly to exclude competitors in other markets.” She said that the verdict should see Microsoft’s 95% share of the PC software market reduce, but would not name a target figure. (source: Metro)

Terms of the deal on the selling of Virgin Megastores were not disclosed yesterday, but industry insiders said that Sir Richard was likely to have offered the management team a significant dowry, possibly more than £20 million, to take the loss-making chain off his hands. The store chain made pretax losses of £82.2 million in the year to March 2006 and the company would not disclose the level of losses in the year to March 2007, but industry observers believe that the cash losses are likely to have been as much as £50 million.

The Zavvi management team, led by Simon Douglas, Virgin Megastores’ managing director, and Steve Peck-ham, its finance director, will continue to operate its more than 130 stores in the UK and Ireland. Mr Douglas, who oversaw a £100 million investment in the Virgin stores over the past three years for Sir Richard, would not comment on the financial backing for his buyout. He said: “There is an opportunity to establish a new and exciting entertainment brand.” (source: Timesonline)

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