updated 12/22/2005 8:31:34 AM ET 2005-12-22T13:31:34

The European Union took new legal steps against Microsoft Corp. on Thursday to ensure better compliance with its 2004 antitrust ruling, threatening fines of up to $2.37 million (2 million euros) a day if the software giant does not meet its demands.

(MSNBC is a joint venture of Microsoft and NBC.)

The EU head office is insistent that Microsoft must provide better documentation on its software programs to competitors in order to achieve interoperability with the dominant Windows PCs and servers. It gave Microsoft until Jan. 25 to answer the complaint.

The EU said it also was investigating the royalties Microsoft would charge for using its software information and said another legal challenge might be issued if it was unhappy with the financial demands.

To back its claim, the EU Commission on Thursday issued a formal “statement of objections,” a measure that could lead to the hefty daily penalties that would be backdated until Dec. 15.

“I have given Microsoft every opportunity to comply with its obligations. However, I have been left with no alternative other than to proceed via the formal route to ensure Microsoft’s compliance,” said EU Antitrust Commissioner Neelie Kroes.

The EU Commission said it based its decision on a report by the monitoring trustee of the 2004 agreement, which said that competitors seeking to operate with Microsoft software “would be wholly and completely unable to proceed on the basis of the documentation.”

It quoted the report as saying that “the technical documentation is therefore totally unfit at this stage for its intended purpose.”

The report further stated that “the documentation appears to be fundamentally flawed in its conception, and in its level of explanation and detail. ... The documentation needs quite drastic overhaul before it could be considered workable.”

Microsoft did not immediately react to the decision.

The EU ordered Microsoft in March 2004 to pay $613 million (497 million euros), share code with rivals and offer an unbundled version of Windows without the Media Player software for what it saw as an abuse of its dominant position in the industry. The Court of First Instance, the EU’s second-highest court, has not yet set a date to hear Microsoft’s appeal.

Microsoft now has five weeks to react to Thursday’s statement of objections and may have an oral hearing with antitrust authorities.

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