EU Competition Commissioner Joaquin Almunia said on Tuesday that there were indications that Microsoft was not providing a screen that allows users access to a choice of internet browsers, rather than just their own product, Internet Explorer.

"We are now opening formal proceedings against the company," Almunia told a news conference.

Almunia warned the company that penalties for non-compliance would be "severe." A company that is found to have breached legally-binding commitments can face fines of up to 10 percent of its annual turnover.

Microsoft immediately issued an apology assuring the European Commission that it would fix the problem.

"Due to a technical error, we missed delivering the BCS software to PCs that came with the service pack 1 update to Windows 7," a statement said, adding that PCs running the original version of Windows 7, as well as Windows XP and Windows Vista, did have the screen.

"While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it."

So far, the European Union has fined Microsoft 1.64 billion euros ($2 billion), including a fine of 899 million euros in 2008 for failing to comply with an order to share product information with rivals so that their software can work with the Windows operating system.

ng/ (AP, Reuters)