updated 7/27/2007 8:24:34 AM ET 2007-07-27T12:24:34

Hungary's state Competition Authority raided the offices of Microsoft Corp.'s local subsidiary as part of a probe into the company's relationship with large software distributors.

The unannounced raid took place July 19 at the offices of Microsoft Magyarorszag Kft., according to a notice posted on the authority's Web site.

According to the statement, Microsoft used sales conditions and offered software distributors incentives — described as "loyalty discounts" — so they wouldn't offer clients anything but Microsoft Office products.

Such behavior could lead to the exclusion of competitive products from the market and violate European Union rules, according to the authority known as the GVH.

"During the raid, the GVH gathered evidence supporting these suspicions," the authority said, adding that the probe did not mean Microsoft had broken the law.

Microsoft spokesman Guy Esnouf said the software company was cooperating with Hungarian authorities.

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