Microsoft has been fined €561 million ($732.2 million) by the EU after breaking its promise to offer millions of users of its Windows system a choice of Web browsers.
The European Commission said it was imposing the fine after the US software giant became the first company to break a voluntary agreement with regulators.
The agreement would have allowed at least 15 million consumers to pick alternatives to its Internet Explorer browser, said the Wall Street Journal.
Previously the EU fined Microsoft €1.6 billion for failing to provide rivals with information at fair prices and for tying its media player to its operating system.
Before today, EU competition chief, Joaquín Almunia, had warned he would use the noncompliance fine to set an example to other companies that might break similar promises in future.
"Such a breach is of course very serious, irrespective of whether it was intentional or not and it calls for sanctions," he told reporters in Brussels.
"I hope this decision will make companies think twice before they ever think of intentionally breaching their obligations or even neglecting their duty to ensure strict compliance."
Microsoft said in a statement it took "full responsibility" for the mistake, which it blamed on a "technical" error. It said that it has since put in more stringent internal procedures to avoid a repeat.
Almunia said the fine has been reduced "because I consider as a mitigating circumstance the good cooperation of Microsoft."