The European Commission continued its punishment of American corporate giant Microsoft Wednesday, hitting the world’s largest software developer with a new record €899 million fine. The enormity of the fine appears to be intended as a warning message to Microsoft and other companies not to cross Europe.

Neelie Kroes, the European competition commissioner, pulled the trigger on Microsoft at a press conference in Brussels, complaining that it had not complied with the Commission’s original 2004 decision that Microsoft had misused the dominant market position of its Windows operating system.

“Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision,” Kroes said. “I hope that today’s decision closes a dark chapter in Microsoft’s record of noncompliance with the Commission’s March 2004 decision.”

That decision resulted in the third and largest fine in four years against Microsoft, which the European Commission says now owes it €1.7 billion (us$2.6 billion). The Commission originally fined the company €498 million in 2004, then hit it with another €280.5 million in July 2006 for failing to license network communications technology.

The size and rationale of this latest fine surprised legal experts, the International Herald Tribunereported.

Heike Schweitzer, professor of competition law at Florence’s European University Institute, said the amount of the fine was surprising given that Microsoft had breached a ruling that its royalty pricing should be reasonable. “I am a surprised that they have imposed such a high penalty over such a vague and difficult concept as reasonable pricing,” Schweitzer said, “although the difference between the royalties originally charged by Microsoft and the one ultimately found to be reasonable is indeed significant.”

Schweitzer also pointed out the European Commission’s increasing aggressiveness, saying, “The high penalty payment can only be understood as a reaction to a behavior by Microsoft, which the Commission interpreted to be a blatant circumvention of the rules it imposed, and as a strong signal that—under such conditions—the Commission will go close to the limits in order to provide for effective deterrence.”

The Tribune, which evaluated the European Commission as “arguably the world’s most activist regulator,” added, “By levying such a large fine [Kroes] also demonstrated her willingness to use a position of strength against one of the biggest global corporations” (February 27).

In response to the $1.3 billion barrage, Microsoft stated, “The Commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved.”

Microsoft, which lost the original antitrust battle in 2004, finally caved in to the Commission in October of last year when Chief Executive Steve Ballmer met with Kroes at a restaurant near The Hague and ended Microsoft’s opposition to the Commission’s demands. But publishing tens of thousands of pages of previously secret Windows code, licensing royalties and meeting literally scores of other demands is apparently still not enough for the increasingly aggressive Commission.

European regulators, who are much less capitalist and much more activist than their American counterparts, have also recently put Qualcomm, Intel, MasterCard, Google and Apple in their sights.

Following Ballmer’s capitulation, the Wall Street Journalwrote, “Europe now writes the rules for global business across the board—unapologetically to the benefit of its own industry” (Oct. 31, 2007).

This is why the European Commission’s increasingly aggressive swagger is significant. Through antitrust and other business legislation and adjudication, Europe is finding that it can handicap America’s economic giants and promote European businesses at the same time. This type of business warfare will help to catapult Europe into increasingly powerful economic and political spheres, and its recoil will continue to hamstring America’s already unstable economy. For more on this subject, read “EU Ruling Trumps the World” and “Regulatory Imperialism.”