South Korea’s anti-trust watchdog on Tuesday stood its ground against Microsoft, declining to reconsider its ruling that the US software giant must unbundle its operating system and pay a Won33bn ($34m) fine for abusing its dominant market position.

While Microsoft is still pursuing an appeal through the courts, the Fair Trade Commission’s move to stand by its ruling means the world’s largest software company might have to offer two new versions of Windows, tailor-made for the Korean market, within the next three months.

“Microsoft must take steps to provide consumers with two versions of its Windows system as stated in the original corrective order,” the Fair Trade Commission said yesterday.

The FTC last year said the bundling of software constituted market abuse and ordered Microsoft to separate its Media Player and instant messaging programmes from its operating system.

Microsoft has to offer two new versions of Windows in Korea – one stripped of Windows Media Player and instant messenger software and the other with links to internet pages that allow users to download competing software products.

The crackdown mirrored the European Commission's long anti-trust campaign against Microsoft but the US Department of Justice attacked the Korean remedy as beyond what was “necessary or appropriate”.

The Korean ruling differs from that in Europe, where Microsoft was allowed to sell its original XP product as well as the unbundled version. In Korea, the FTC ruled it can sell only the separated product, a decision that Microsoft says takes choice away from consumers.

While saying it respected the decision, Microsoft yesterday signalled it would continue to fight the ruling and the fine.

“Microsoft firmly believes it has complied with Korean competition laws, and has conducted business for the benefit of the consumers in Korea,” the company said in a statement. “Microsoft will continue to defend its position in the case through the appeal process in the Seoul High Court.”

While the court considers the appeal, Microsoft has applied for a stay on the remedy, likely to be decided in the next few weeks. If that goes against Microsoft, the software company will have to unbundle its operating systems by an August 24 deadline.

The investigation began with a complaint by Korea's leading portal, Daum Communications, which scrapped its objection after agreeing a $30m settlement with Microsoft in November. Microsoft also reached a $761m settlement with RealNetworks, the US group, over the same issue.

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