Software giant Microsoft has offered concessions aimed at settling an investigation by the European Commission's competition unit.

The company's European arm on Tuesday said it was prepared to standardise specialised security software which critics say makes it difficult to run Microsoft's dominant Windows operating system with its competitors' products.

"We're taking steps to address the concerns raised by the Commission," said John Frank, a lawyer for Microsoft Europe.

The Commission last August said it suspected Microsoft of abusing Windows' dominance of the desktop software market to muscle in on the market for servers - systems which link personal computers into networks.

Rivals not satisfied

One strand of the Commission's investigation has focused on Microsoft's security software, which critics say works optimally only when it is used between Microsoft servers and computers running Windows.

The Commission declined to comment on Tuesday, saying it had not yet received Microsoft's proposals.

But Microsoft's rivals said they did not believe the concessions will guarantee long-term compatibility between Windows and non-Microsoft products.

A spokesman for the Computer and Communications Industry Association, which represents Microsoft's rivals, described the proposals as "backward-looking".

Financial penalty

Microsoft has been battling anti-trust probes on both sides of the Atlantic for most of the past four years.

If the Commission finds it guilty of breaching European competition law, the company could face fines of up to 10% of its global turnover - about $2.5bn.

In the US, a bid by anti-trust authorities to have Microsoft broken up into a series of smaller companies failed last year, but the courts ruled that the software giant was guilty of anti-competitive behaviour.

Microsoft's rivals, including AOL Time Warner and Sun Microsystems, are now using this ruling to bring private anti-trust lawsuits against the company.

Last week, Sun launched legal proceedings, claiming Microsoft's anti-competitive actions had cost it more than $1bn in commercial damage.

Nine US states which did not sign up to a final settlement with Microsoft are still in court pushing for tougher penalties against the software giant, with the next round of hearings due to begin next week.