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UPDATE: Legal expert says EC may "send out message" & fine Microsoft £4.5bn

Microsoft could face a fine of up to $7 billion, or nearly £4.5 billion, if EU competition regulators decree that it failed to comply with the terms of a 2009 agreement intended to allay fears its business practices were anti-competitive, according to a report on expert legal news portal Out-Law.com.

The European Commission has said it is launching an immediate investigation into whether Microsoft failed to honour its commitment to offer users of its OS a range of Internet browser options. The US tech giant stands accused of acting dishonestly, informing the EC in December 2011 that that the browser-choice screen (top) was in place despite evidence pointing to its disappearance in February of that year, following the launch of Windows 7 Service Pack 1.

Microsoft has blamed the failure to live up to its pledge on a "technical error," an explanation that may or may not satisfy the competition regulators, who have said that they "trusted the company's reports were accurate" but that "it seems that was not case" and that the firm should "expect sanctions" if it was discovered to have infringed on the legally binding agreement.

Legal eagle Alan Davis, a competition law specialist with Pinsent Masons – who operate Out-Law.com – contends that if found guilty, the fine faced by Microsoft would far eclipse previous penalties levied by the Commission, and that the company faces an uphill battle trying to prove the vanishing screen was an unwitting glitch.

"Given the strength of Microsoft's dominant position in the PC operating software market at the time, this was a critical remedy to deal with the serious competition concern about Microsoft tying its Internet Explorer web browser product to its PC operating software," he said."

He continued: "Microsoft managed to avoid very significant fines being imposed by entering into this commitment back in 2009. By failing to honour that commitment, the Commission is now able to impose huge fines of up to 10 per cent of Microsoft's turnover, meaning potentially up to $7 billion."

"This is the first time that a commitment has been broken by a company in this position. Given the resources available to Microsoft to monitor its compliance with the commitment, the Commission is unlikely to have much sympathy for their arguments that this was a mistake or a technical glitch...the Commission will also want to send out a deterrence message to other companies about how seriously they take compliance with commitments," he concluded.

The EU's competition regulators have been especially active recently. In addition to whacking Microsoft with the £700 million fine for antitrust violations, it is also chasing Google over potential breaches of European competition laws.