EU regulators set to fine Microsoft for breaking browser pledge

A worker adjusts a logo on the Microsoft stand at the CeBIT computer fair in Hanover February 27, 2011.

BRUSSELS (Reuters) - European Union anti-trust regulators are set to hit Microsoft (MSFT.O) with a hefty fine on Wednesday for breaking a promise to offer consumers using its Windows system a choice of rival Internet browsers, people familiar with the case said.

EU anti-trust chief Joaquin Almunia is expected to use the fine - which could run into hundreds of millions of euros - to set an example after the U.S. software giant became the first company to break a promise made to end an anti-trust probe.

Almunia will announce his decision at 1130 GMT, the sources said. Reuters reported last week that EU regulators would fine Microsoft before the end of March.

EU rules mean the company could be penalised $7.4 billion or 10 percent of its fiscal 2012 revenues although regulators are not expected to levy such a high fine.

The fines relate to an anti-trust battle in Europe more than a decade ago. In order to avoid a penalty then, Microsoft promised to offer European consumers a choice of rival browsers.

EU anti-trust regulators said this did not happen for a period during February 2011 and July 2012, a lapse Microsoft blamed on a technical error. It has said it since tightened internal procedures to avoid a repeat.

The European Commission has already fined Microsoft 1.6 billion euros to date for not providing data at fair prices to rivals and for tying its media player to its operating system.

The latest lapse did not escape the notice of Microsoft's board, which cut the bonus of chief executive Steve Ballmer last year, partly because of the Windows division's failure to provide a browser choice screen as required by the European Commission, according to an annual proxy filing.

Both the European Commission and Microsoft declined to comment.

Microsoft's share of the European browser market has roughly halved since 2008 to 24 percent in January, below the 35 percent held by Google's (GOOG.O) Chrome and Mozilla's 29 percent share, according to Web traffic analysis company StatCounter.

(Reporting by Foo Yun Chee; Writing By John O'Donnell; Editing by Sophie Hares)