Microsoft Corp. lost a European Union challenge to an 899million-euro ($1.1 billion) antitrust fine, with a court saying it“essentially” upheld the penalty.

The EU General Court cut the fine by 39 million euros, or 4.3percent, to 860 million euros in a ruling today. TheLuxembourg-based tribunal rejected all of Microsoft's argumentsover the fine levied by the European Commission for the company'sfailure to obey an order to share data with rivals.

The fine was on top of Microsoft's earlier penalties of 497million euros and 280.5 million euros in the antitrust case andsurpassed only by a 1.06 billion-euro levy against Intel Corp.during a period of EU scrutiny of U.S. technology companies.

The court's endorsement of the fines “is likely to embolden thecommission in pursuing procedural violations,” said Suzanne Rab, alawyer at King & Spalding LLP, Rab worked on assignment atPricewaterhouseCoopers LLP in 2008 on matters unrelated to its workmonitoring Microsoft's compliance with the EU order, she said.

Microsoft's Windows software powered 95 percent ofpersonal-computers in 2004, when EU regulators fined the company arecord 497 million euros and ordered it to offer a version of thesoftware without a music and video player. Now, amid a global slumpin PC sales, Microsoft is preparing to manufacture its first tabletto challenge Apple Inc.'s iPad.

Microsoft, based in Redmond, Washington, said while it wasdisappointed, it paid the fine several years ago. The world'slargest software company can challenge today's decision at the EU'shighest court, the European Court of Justice. Microsoft didn'tappeal a court ruling it lost in 2007 that sought to overturn the2004 order, unaware that judges were split 7-6.

Today's ruling backed the EU's so-called periodic penaltycalculated because Microsoft was in breach of the EU order for 488days, regulators said in 2008. The court cut the fine to take intoaccount a letter from the commission in 2005 that accepted limitson Microsoft's supply of information to open-source softwaredevelopers.

Joaquin Almunia, the EU's antitrust chief, said the judgment“fully vindicates the enforcement action that the commission tookto ensure Microsoft's compliance with its obligations,” paving theway for “a range of innovative products that would otherwise nothave seen the light of day.”

Microsoft is the only company in more than 50 years of EUcompetition policy penalized for failing to comply with an order.The company reached a settlement in 2009, which allowed today'sappeal, in a bid to repair the company's relationship with theEuropean Commission.

Microsoft is now on the other side of the fence, filingcomplaints against Google Inc. and what is now its MotorolaMobility unit.

The case is T-167/08, Microsoft v. European Commission.

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