The European Union is threatening to fine Microsoft up to five per cent of its global turnover if it does not follow the judgement in last year's EU ruling.

Officials are unhappy that the proposed server licence put forward by Microsoft will penalise open source software developers by charging unfairly high royalty fees.

The redrafted server licence is one of two actions demanded in the case brought against Microsoft. The other, a version of Windows without Media Player bundled in, was announced in January.

"On the basis of market test results, we have serious doubts that Microsoft is complying with the interoperability remedy," said EU competition spokesman Jonathan Todd.

He pointed out that after checking with other players in the technology field the proposed server interoperability licence would not give developers sufficient access to the code to build applications that would work seamlessly with Windows.

The proposed terms were also too expensive for most people and the royalty payments were set too high.

"Microsoft remains fully committed to complying with the Commission's decision," said a Microsoft spokesman today.

"We initially gave the Commission our proposal in May of last year, provided additional detailed information throughout the year and have been waiting for feedback since.

"We are grateful to receive the results of the Commission's market testing, as it enables us to respond promptly and in an appropriate way to work through the issues raised with the Commission."

Last year the EU hit Microsoft with a fine of €497m (£331m) for anticompetitive practices, but the software giant vowed to fight the ruling. The severity of the fine contrasts with Microsoft's soft handling in a similar case brought by the US Department of Justice.