The European Commission (EC) has issued a Statement of Objections to Microsoft, for failing to comply with its March 2004 decision leading to the possibility of more fines.

Competition Commissioner Neelie Kroes said: “Microsoft has agreed that the main basis for pricing should be whether its protocols are innovative. The Commission's current view is that there is no significant innovation in these protocols. I am therefore again obliged to take formal measures to ensure that Microsoft complies with its obligations.”

Microsoft distinguishes between fourth protocol categories (Gold, Silver, Bronze and ‘others’) depending on how innovative these protocols are and links this to the royalties it requires (from the most expensive Gold down to the ‘others’ that do not require any royalty).

David Mitchell of analyst firm, Ovum said the statement brings the prospect of further fines being levied on Microsoft. The EC has still to decide whether the technical documentation that Microsoft submitted in November 2006 is complete and accurate.

But he said if the EC is taking on the role of arbiter on whether IT is innovative enough to protect then it must pursue this process with a huge proportion of companies in the entire industry.

“This will require initiating thousand of cases that will increase the utilisation of legal firms in Europe and elsewhere. On this basis it is going to need a lot more staff and the offices to house them,” he said.

He added that this case was taking increasingly bizarre turns and needed to be brought to a rapid conclusion. “The process could only be more farcical if the European Commission made its next announcement in a clown suit, complete with big red nose and ridiculously large shoes.”