The European Commission yesterday won an epic battle of wills with Microsoft when the US software giant finally agreed to do what Brussels demanded of it many years ago and share the secrets of its software with competitors.

In a triumphant press conference just a few hours after the deal was struck, EU competition commissioner Neelie Kroes said the agreement was "a victory for the consumer".

She added that it would "profoundly affect" the software industry with "repercussions" for years to come.

Microsoft's move means it is now complying with a landmark decision in 2004 in which the commission, after a five-year investigation, said the company was abusing its dominant position in the market to squeeze out other players.

Under yesterday's agreement, Microsoft will make available to other software developers information for making their programmes operate with the Microsoft's Windows operating system.

In addition, royalties on software developed using this information will be reduced to a one-off payment of €10,000 - previously the US company had looked for 2.98 per cent of revenues.

Lastly, Microsoft agreed that royalties for a worldwide licence would be reduced to 0.4 per cent of revenues - considerably less than the 5.95 per cent that the software giant had initially sought.

The legal tussle between Microsoft and the commission was of huge significance for the credibility of Brussels' anti-trust unit and its ability to tackle other large companies.

The specific accusation that Brussels levied against Microsoft three years ago was that it was using its stranglehold on PC operating systems - through its Windows programme - to keep rivals out of the markets for media players and server operating systems.

It fined the US firm almost €500 million in 2004 and then a further €280.5 million last year for non-compliance with the decision.

Microsoft appealed the decision, but last month a European court backed the commission on all significant points.

Ms Kroes said the company will no longer have to pay fines from yesterday, but indicated that a final decision still had to be taken on whether it would have to pay fines for non-compliance since 2006.