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The European Court of First Instance surprised many but delighted the Commission by upholding every part of the Commission's 2004 decision to impose a record €497 million fine on Microsoft for violating antitrust rules and demand changes to Windows to improve competition.

Neelie Kroes, Commissioner for Competition Policy, said that the decision has "set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries".

Without mentioning any other company by name, she said that the court has has confirmed the importance of interoperability for consumer choice and innovation in high tech industries.

"If competitors are unable to make their products 'talk to' or work properly with a dominant company's products, they are prevented from bringing new innovative products onto the market, and customers are locked into the products of the existing provider," she said. "Consumers want interoperable products, and companies that want to meet consumers' demands should be able to provide them."

The ruling, said Kroes, "sends a clear signal that super-dominant companies cannot abuse their position to hurt consumers

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and dampen innovation by excluding competitors in related markets."

Commission officials are due to meet officials from Apple and the four major record companies this week to discuss the pricing structure of Apple's iTunes Store. Following a complaint by the UK's Office of Fair Trading, the Commission wants to know why iTunes downloads cost more in some countries, notably the UK, than they do elsewhere in the EU. The EU believes that the record companies, rather than Apple, are responsible for setting prices, but following yesterday's ruling, the Commission may also be encouraged to begin investigating whether Apple's use of DRM to restrict most iTunes downloads to just one kind of portable music player, Apple's own iPod.

The question there is whether Apple, like Microsoft, has used its dominance in one market - namely the music player market where it has an estimated 70% market share - to "unfairly" dominate another market, music downloads. That is a situation that could easily be remedied by the scrapping of DRM, something that Apple has encouraged and one of the four majors, EMI, has embraced.

Microsoft is still digesting the court's decision and had yet to decide whether to exercise its right to one final appeal. In a preliminary statement, general counsel Brad Smith welcomed the court's diligence and "lengthy consideration".

"It's clearly very important to us as a company that we comply with our obligations under European law," he said. "We'll study this decision carefully, and if there are additional steps that we need to take in order to comply with it, we will take them."