updated 5/23/2005 10:58:48 AM ET 2005-05-23T14:58:48

The European Union has given Microsoft Corp. until the end of the month to comply with its antitrust order or face punitive sanctions, the software producer and an EU official said Monday.

The dispute stems from what regulators consider the software maker’s recalcitrance in providing server software source code to competitors, and on EU doubts on whether the Windows without Media Player version that Microsoft was forced to produce is technically fully up to standard. (MSNBC is a Microsoft-NBC joint venture.)

“We will take stock after the end of the month,” EU Commission spokesman Jonathan Todd said. The EU has within its rights the possibility to fine Microsoft up to 5 percent of its daily global sales for each day that a decision is not applied to its satisfaction.

Microsoft acknowledged the deadline and said it continues to work with the Commission toward an agreement on full compliance.

Microsoft shares rose 13 cents to $25.87 in morning trading on the Nasdaq Stock Market.

Todd said negotiations between antitrust regulators and Microsoft were continuing, but refused to say whether any breakthrough on several outstanding issues was close.

“The contacts are continuing — regular contacts,” he said. “I am not qualifying the current state of play at all,” he said.

EU antitrust regulators fined Microsoft a record 497 million euros ($624 million) when they ruled in March last year that the company abusively wielded its Windows software domination to lock competitors out of the market.

The orders of the European Commission require Microsoft to share under certain conditions its Windows server code with rivals to make the industry more competitive in the European marketplace. The EU says this has not been satisfactory so far.

Last month, the EU’s regulators were still not convinced that the Windows version the company was forced to produce without Media Player was technically up to standard. And questions remained over whether enough had been done to let competitors be interoperable with Microsoft’s system.

Microsoft said last month that it would meet most demands by EU regulators on making software blueprints available to competitors, including lowering licensing fees, but sought further talks on some issues.

The company said it would give competitors a price break on reviewing source code and more time to decide whether they want to license it — charging 500 euros ($627) a day for up to eight days instead of allowing a maximum of two days at 3,850 euros ($4,831) for the first day or 5,390 euros ($6,764) for two days.

Microsoft said then it was working on a new set of prices for licenses to address the commission’s concerns that previously proposed fees of $100 to $600 per server were too high.

Neither side would comment on price Monday.

A partial agreement on the outstanding issues would not suffice, said Todd. “Nothing is resolved until all is resolved,” he said in a telephone interview.

Once the deadline passes, “I would imagine we will decide shortly afterward basically whether or not what they offered is sufficient or not,” he said. “If it is not, then we would initiate a procedure for imposing the daily fines.”

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