Microsoft is facing millions of euros in fines after failing to reach a settlement in its epic anti-monopoly battle with European regulators.
Mario Monti, the EU competition commissioner, on Thursday announced that since talks had broken down the US software company would be subject to a precedent-setting ruling and financial penalties.
"We made substantial progress toward resolving the problems that had arisen in the past, but we were unable to agree on commitments for future conduct," he said.
"It was impossible to achieve a satisfactory result in terms of setting a precedent. In the end I had to decide what was best for competition and consumers in Europe," he said.
Clear principles were needed "for future companies with such a dominant position in the market," he said.
Brussels has the power to fine a company up to 10 percent of its worldwide annual turnover which in the case of Microsoft is about euros 2.5 billion.
Microsoft is understood to have made a last-minute offer to include rival media programs with Windows alongside its own.
The dramatic EU announcement signalled the end of two days of talks between Monti, who in 2001 blocked General Electric's takeover of Honeywell, and Microsoft's chief executive, Steve Ballmer, who was seeking concessions on software monopoly charges.
"I believe we reached agreement on the issues of the case," Ballmer said. "But we were unable to agree on principles for new issues that could arise in the future."
Microsoft stands accused of unfairly grabbing market share by bundling its version of products with Windows -- the operating system in nearly every personal computer.
Microsoft says this benefits consumers, but rivals say it is unfair competition and intended to drive them out of business.
The EU says Microsoft's non-disclosure of the interface information -- necessary for competing servers to properly "talk" to Windows equipment -- pushed client support in the direction of the US group.
The EU has been demanding that Microsoft offer computer makers in Europe a discounted version of Windows without its Media Player so rivals such as RealNetwork's RealOne Player and Apple's QuickTime have a better chance of reaching consumers.
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