The European Commission today threatened to ramp up its punishment of Microsoft yet further after fining the world's largest software developer a fresh €280.5 million (£194m) for breaking competition laws.

The latest fine is made up of a daily penalty of €1.5 million a day from December 15 to June 20, less than the €2 million a day widely expected. Microsoft has now been fined €780 million by the Commission after being found guilty of abusing its dominant market position in 2004.

The EU Competition Commissioner Neelie Kroes today said she would impose further fines of €3 million a day starting on July 31 if Microsoft did not agree to hand over information that would allow competitors to build software that works with its dominant Windows operating system.

Outlining the Commission's stance, Ms Kroes suggested Microsoft had so far enjoyed relatively lenient treatment. The European Union can fine a company up to 5 per cent of its annual global turnover, she pointed out. This would mean a fine of $4.28 million (£2.3m) a day out of Microsoft’s daily revenue of $85.7 million, she said.

Ms Kroes added that she had warned Microsoft that it had to take care to avoid antitrust problems with its new operating system Vista, which will include an internet search engine and a PDF-type document reader that will compete with other companies.

"Microsoft is aware of it," she said. "Hopefully it will be in a shape ... that all those items are taken into account."

The new fines will take effect unless Microsoft supplies "complete and accurate" technical information to rivals to assist them in building software that works smoothly with Windows.

"I regret that, more than two years after the decision ... Microsoft has still not put an end to its illegal conduct," Ms Kroes said.

"I have no alternative but to levy penalty payments for this continued compliance. No company is above the law."

Pat Treacy, competition partner at Bristows, said: “The Commission’s intention to enforce the competition rules in the most vigorous possible fashion is ever clearer.

"The decision against Microsoft coupled with the Commission’s publication last month of new and more draconian guidelines on the method for setting fines sends the clearest possible signal that companies should ignore the competition rules at their peril"

Microsoft immediately said it would appeal the Commission’s decision.

Brad Smith, Microsoft's general counsel, said: "We do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the commission’s original decision and our good-faith efforts over the past two years.

"We will ask the European courts to determine whether our compliance efforts have been sufficient and whether the commission’s unprecedented fine is justified."

The confrontation with Europe's competition watchdog has already seen Microsoft fined a record €497 million after the company was found to have illegally combined its Windows Media Player product with its Windows operating system, a move the EC said stifled competition.

The EU also ordered Microsoft to share the blueprints of its Windows operating system, which accounts for around 90 per cent of the market.

Microsoft has since been accused by the EC of delaying the release of the data, which runs to an estimated 12,000 documents.

Appealing the decision earlier this year, Microsoft accused the EC of moving to "handicap in perpetuity" its business by forcing it to hand over trade secrets.

Microsoft, which has been involved in a string of similar competition cases around the globe, has also protested that it is working to fix problems with the technical information it has been ordered to hand over.

It claims it has 300 people working on the task and that six of seven instalments have so far been delivered.

"Microsoft is dedicating massive resources to meet the aggressive schedule and high-quality standards set by the trustee and the Commission in this process," it said in a statement earlier this month.

"Our engineers are working around the clock to meet the seventh and final delivery date for this project scheduled for July 18."

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