EU to fine Microsoft £340m

Software giant Microsoft is facing a record European Union fine of £340 million for abusing its domination of the computer market.

Bill Gates' empire will also be forced to tell rivals more about how its products work in long list of punitive " remedies" handed out by EU commissioner Mario Monti.

The massive fine beats the £309 million penalty handed out by the European Commission to Swiss drugs giant Hoffman-La Roche three years ago for its part in a vitamins cartel.

But it has already been slammed by Microsoft's critics as fairly insignificant to the US giant, representing less than 2 per cent of the company's £17 billion annual sales.

Microsoft, which is set to appeal against the decision, also has £29 billion in the bank. "This is a traffic ticket for Microsoft," said Thomas Vinje of lawyers Clifford Chance, who represents Microsoft's opponents.

The case centres on Microsoft's Windows Media Player, which allows people to play music and video clips on everyday PCs. Its main rivals are RealNetworks' RealPlayer and Apple's QuickTime.

Commissioners believe Microsoft illegally exploited its Windows monopoly by bundling Media Player with the operating system.

They also say the firm sought a stranglehold on the market by designing its workstation software to work better with Windows NT network servers than with rival network software from companies such as Sun Microsystems.

The EU took huge amounts of evidence and insiders believe the fine, to be voted on by the full European Commission-tomorrow, has been doubledto take account of Microsoft's global operations.

But Monti's list of " remedies" to break Microsoft's dominance are far more likely to hurt Bill Gates' executive team than the regulator's financial penalty.

Alongside the ruling, the EU will force Microsoft to sell two versions of Windows in Europe - one with Media Player and one without. It also wants it to share information in the market for computer servers.

Microsoft boss Steve Ballmer met the EU commissioner last week in a lastditchbid to avoid a tough rulingand the company is widely expected to fight the verdict in an appeal that could last several years.

Horacio Gutierrez, chief European legal counsel for Microsoft, is expected to argue that the fine is inappropriate - as the case sets a precedent, and the firm cannot not have known it was breaking EU competition law.

Last year, Microsoft reached a settlement with the US government to open up to competitors - avoiding a multi-billion dollar fine and the possible break-up of its business.