A commission spokesman told AFP that the commission had told Microsoft officially that a proposal it had made for how a mediator would be involved was "unacceptable".

The spokesman said: "Microsoft wanted a right of veto on the questions which the mediator could study."

Microsoft was given 10 days in which to reply.

In response, the world's biggest software group said it sought more clarity from the commission.

"We need consistency, both so it is clear what we are supposed to do and so the (EU high) court (in Luxembourg) can review this," a company spokesman said.

Brussels found the idea of a veto "unacceptable because it would compromise the ability of the person mandated to provide the commission with effective help in monitoring application of the penalties in March 2004," the commission spokesman said.

In March 2004, the commission imposed a record fine of 497 million euros (646 million dollars) on Microsoft and said it had to make available a version of its Windows software without the Media Player video software.

It also obliged Microsoft to make available information needed by producers of competing products to enable them to operate with Windows.

The commission had said at the time that the conditions had to be applied efficiently and within a determined timetable.

It planned to appoint someone to overseeing application, including full and complete disclosure of information required for dialogue with Windows, and to verify that the two versions of Windows on offer provided the same performance to users.

A Microsoft spokesman told AFP that the company would study the commission's objection constructively and would reply quickly.

He said that Microsoft had put forward its proposal for how the expert would work about two months ago and that it was in line with the principles required earlier by the commission.

If, within this delay, Microsoft did not accept the monitoring system sought by the commission, the EU authority could decide to impose it formally.

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