BRUSSELS, Belgium - The European Union declared Microsoft Corp. guilty of abusing its "near monopoly" with Windows to foil competitors in other markets and hit the software giant with a record fine of $613 million today.

The EU's antitrust authority said "because the illegal behavior is still ongoing," it also was demanding changes in the way Microsoft operates in Europe, with the aim of improving competition globally. Those sanctions go well beyond the 2001 U.S. antitrust settlement.

The regulators gave Microsoft 90 days to offer European computer manufacturers a version of Windows without the company's digital media player, which lets computer users watch video and listen to music and is expected to be an important market as multimedia content becomes more pervasive in coming years.

The European Commission also chastised Microsoft for trying to "shut competitors out of the market" in software for office servers, by hoarding code that would help competing programs work smoothly with Windows computers. Microsoft now has 120 days to provide rivals in the server market with such code.

EU Competition Commissioner Mario Monti said the ruling was "proportionate" and "balanced," and said "dominant companies have a special responsibility to ensure that the way they do business doesn't prevent competition."

"We are simply ensuring that anyone who develops new software has a fair opportunity to compete in the marketplace," he told a news conference.

Monti said he limited the order to Europe "in deference to the competition authorities of the United States and other countries."

"We could legally have imposed explicitly a worldwide geographic scope, given the global nature of these markets," he said. "We have not done so."

He said limiting it to Europe "will not unduly undermine the effectiveness of the remedies," given the size of the European market. Microsoft, which had $32 billion in revenue last year, does about 30 percent of its business in Europe.

Microsoft's general counsel, Brad Smith, told reporters the company would appeal the decision to Europe's Court of First Instance and ask that "at least part" of today's ruling be stayed or suspended during the appeal, which could take years.

Settlement talks between Monti and Microsoft broke down last week over the EU's insistence that any deal also restrict what features could be added to future versions of Windows, such as a better search engine. The Commission is already investigating a complaint filed by competitors against the latest version, Windows XP.

Noting that the U.S. case was settled after an appeals court ruling, Smith said a similar scenario could play out in Europe, although no discussions are underway.

"Frankly we remain hopeful that we may at some point ... reach a mutual solution to these issues," he said.

Microsoft was found guilty of similar monopolistic behavior in the U.S. case, but the EU order strikes deeper because it aims at the heart of Microsoft's business strategy - regularly adding new features to Windows to help sell upgrades.

The Redmond, Wash.-based company argues such "bundling" benefits consumers. But rivals call it unfair competition, given Windows runs more than 90 percent of personal computers worldwide.

The EU regulators were concerned that bundling "deters innovation and reduces consumer choice in any technologies which Microsoft could conceivably take an interest in and tie with Windows in the future."

For example, the EU said it was concerned a stranglehold on media players could let Microsoft dictate future industry standards for how digital music and video files are encoded, distributed and played.

Under the EU order, Microsoft could continue selling a version of Windows with its media player software installed, but it must refrain from "any commercial, technological or contractual terms" that would make the stripped-down version of Windows less attractive or a poorer performer.

Fearing that attempts to set prices would be overturned in court, the Commission did not order Microsoft to make the stripped-down version available at a discount. But it said Microsoft could not offer PC makers a better deal for buying the version of Windows with Microsoft's media player included.

That part of the ruling could boost rival makers of media software, led by RealNetworks Inc. and Apple Computer Inc.

The other half of the case involved low-end servers, which tie desktop computers together in offices.

Silicon Valley-based Sun Microsystems Inc. complained to the EU in 1998 that Microsoft refused to provide proper details needed for Sun products to "talk" to Windows computers as efficiently as Microsoft's own server software could.

The Commission said Microsoft's refusals to disclose server software code "were part of a broader strategy designed to shut competitors out of the market." The risk, the Commission said, was that Microsoft's dominant position would end up "eliminating competition altogether."

The ruling said Microsoft could get "reasonable remuneration" for disclosing its proprietary software code, and added that the Windows source code itself would remain untouched.

The EU also said it would appoint a trustee to monitor Microsoft's compliance with the ruling.

The fine, 497 million euros, surpassed the EU's 2001 penalty of 462 million euros against Hoffman-La Roche AG for acting in a cartel. Money from the fine would be redistributed to the EU member states.