Microsoft Corp. dropped its three-year opposition to a European Commission antitrust ruling on Monday by agreeing to make it easier for other software companies to function with its Windows operating system.

"The repercussions of these changes will start now and will continue for years to come," Competition Commissioner Neelie Kroes told reporters at a news conference. Microsoft's agreement will have "profound effects" on the software industry and is "a victory for the consumer," she said.

Among the key changes will be a decrease in the royalty payments other software makers must pay Microsoft to make their products work with Windows, the operating system on which more than 90 per cent of the world's computers run. Microsoft will scrap ongoing royalty payments and instead impose a one-off fee of 10,000 euros.

The company will also lower fees on related patents to 0.4 per cent from 5.95 per cent. Microsoft had been seeking to increase these fees up to 7 per cent.

In a 2004 ruling, the European Commission found Microsoft had used its market power to crush competing software companies and fined the company 497 million euros ($690 million Cdn at today's exchange rates). The Redmond, Wash.-based software giant then incurred a further fine of 280.5 million euros in 2006 for failing to comply with changes demanded by the commission.

The commission also threatened the company earlier this year with further daily fines, on top of what it has already paid, if it did not change its practices.

Microsoft reached a similar antitrust settlement in 2002 with the U.S. Department of Justice, which placed several restrictions on the company. Since the settlement, Microsoft has been prohibited from retaliating against computer manufacturers who install rival operating systems and from licensing software to them on unequal terms.

Those restrictions expire on Nov. 12, and the Department of Justice on Friday said they would not be renewed, despite the insistence of several states. The department in August said the restrictions had been successful in curbing Microsoft's abusive behaviour and were no longer necessary.