The European Commission is scrutinising a proposal from Microsoft over a competition ruling after the software giant submitted a response shortly before a midnight deadline expired last night.

"Contact continued between the European Commission and Microsoft until late last night," said a spokesman for the competition commissioner Neelie Kroes.

"The Commission will now carefully analyse what has been put on the table and decide whether or not we consider that Microsoft has complied with the March 2004 decision."

In 2004, Brussels found Microsoft guilty of abusing its market dominance, and fined it a record €497 million (£340m). The company faced additional fines of 5 per cent of its daily turnover - about $5 million (£2.8) a day - if it failed to meet last night's deadline.

The EC ordered Microsoft to share details of its Windows software with rivals, to allow them to develop compatible products, and to provide a version of Windows without its own Windows Media Player.

A Microsoft spokesman said: "Microsoft submitted its proposal to the Commission last night. We now await their response."

The EU executive warned yesterday that if Microsoft’s proposals are not satisfactory, then a decision to fine the US software giant could be taken before the end of July.

If the proposals are deemed unacceptable, the commission will formally notify the company of its intention to fine the company, give Microsoft a chance to respond, consult member states, national competition authorities and an advisory committee made up of other units of the commission.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats