The European Commission (EC) has warned Microsoft not to break anti-trust rules when it introduces Vista next year.

In a letter to the company, the EU had raised its concerns about plans to bundle an Internet search function, a DRM program, and software for creating a fixed document format comparable to the PDF format, as well as security features, said Commission spokesman Jonathan Todd.

The software giant had also stunted competition by not allowing competitors the information needed to make their servers interoperate with PCs running Windows.

"The Commission is concerned that computer manufacturers and consumers won't have a proper choice of software," he said.

Microsoft responded with a statement saying, "We have a responsibility to make our products better and more secure for our customers in a manner that respects all laws and competition standards."

"Microsoft is building Windows Vista to provide the most secure personal computing environment and to provide unprecedented opportunities for other companies throughout the industry," it continued, adding that consumers are "free to use a wide range of competitor products, and Windows Vista is designed to respect the choices that consumers make."

Keeping the industry and regulators informed of its product development plans "has been, and will remain, a priority," Microsoft said.

No formal investigation has been opened yet, but Todd said "If our concerns are confirmed and we conclude that Vista violated European competition rules then we would open a new case."

Todd was responding to questions prompted by comments made by Competition Commissioner Neelie Kroes in an interview in The Wall Street Journal Europe.

"We expect that Microsoft will design Vista in a way which is in line with the European competition laws," said Kroes. "It would be rather stupid to design something that is not," she said.

Kroes said she had written a letter to Ballmer at the beginning of last week, detailing the Commission's specific concerns about Vista.

"Microsoft asked us what could be problematic with Vista so we told them," Todd said.

The warning about Vista comes a day before Microsoft's top lawyers gather with regulators and rivals at a Brussels hearing about the company's compliance with the 2004 ruling.

In December the Commission issued a new lawsuit against Microsoft, accusing it of failing to honor the 2004 ruling. Microsoft requested the hearing so that it could refute the Commission's accusation and explain to regulators that it is in compliance with the ruling.

If Microsoft fails to change the Commission's mind it faces daily fines of up to €2 million until it is deemed to be in compliance with the 2004 ruling.