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Microsoft to Reduce Taiwan Prices
Feb 28, 2003
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Microsoft will cut retail prices for key products in Taiwan by up to 54.5 percent to escape a competition lawsuit and possible sanctions, in a move that could trigger pressure on the world's biggest software company for similar concessions in other markets.

The Fair Trade Commission (FTC), Taiwan's competition regulator, announced it would stop its investigation against Microsoft allegedly breaching Taiwan's fair trade laws, in exchange for the promise by Microsoft to cut product prices in Taiwan by an average 26.7 percent.

The FTC approved a 5-year administrative settlement the two sides negotiated late last week. Microsoft Taiwan said it would cut retail prices 90 days after the contract took effect. The company further agreed to share parts of the Windows source code with Taiwan's government and companies to facilitate them creating software that runs under Microsoft's operating system. The case was triggered early last year by a government crackdown on pirated software.

Taiwanese political parties and consumer organisations launched a wave of criticism against the US software giant, accusing it of selling its software in Taiwan at up to 18 percent above world market prices.

The FTC began an investigation over the allegation that the company abused its market dominance to engage in "violent monopolism".

The FTC set as a final deadline for an administrative settlement. Otherwise, the regulator had threatened to take Microsoft to court, with the possibility of fines of up to T$25m (U.S. $700,000) being levied.

Microsoft has now agreed to cut the retail price of the Windows XP students' edition by 54.4 percent. Office XP will sell for 50.1 per cent less to students. Windows XP Professional will be 23.7 per cent cheaper, and the price for Office XP Professional will be cut by 14 per cent, the company said. Single components of the Office package will also be sold more cheaply, with 40 per cent less for Word being the steepest cut. The percentages apply to price levels of May 2002, when the FTC opened the investigation.

"There's really no evidence to suggest that this process, which was specific to Taiwan, is going on elsewhere," Microsoft said. While the company faced antitrust reviews by a number of bodies, including the European Commission, these were not focused on its software pricing, it added.

The FTC was a "fair body and not supposed to interfere with market prices", Microsoft said. Therefore the price cuts were a completely voluntary step. But they would apply "indefinitely". (Financial Times)

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