Japan's fair trade watchdog raided the Tokyo offices of Microsoft yesterday for allegedly breaching anti-monopoly laws.

The Japanese fair trade commission suspects that the US software company has tried to impose restrictive contracts on Japanese computer firms wanting to license its Windows XP operating system.

The raid came only weeks before regulators from the EU are due to meet in Brussels to discuss an anti-trust ruling issued against Microsoft by the European commission.

Microsoft has long been dogged by such concerns: it fought a three-year court battle in the US over monopoly allegations regarding its Windows operating systems before reaching an out-of-court settlement.

Microsoft has allegedly forced Japanese PC makers to agree not to take legal action against it, even if the Seattle-based company is found to be using the PC manufacturers' patented technology in its Windows software. If they do not agree to the waiver, they are prevented from pre-installing Windows, which dominates the Japanese PC market.

The fair trade commission suspects the clause has been foisted on several consumer electronics companies, including Sony and Hitachi.

Microsoft is likely to be ordered to remove the clause if found in breach of anti-monopoly laws.

A spokeswoman for the company said it was cooperating with investigators but denied there was anything wrong with the licensing agreements, the Associated Press reported.

In 1998, fair trade officials warned Microsoft Japan to stop demanding that domestic PC makers install its spreadsheet and word-processing software together. The company was also rapped for forcing PC makers to accept Internet Explorer as part of the Windows operating system in an attempt to see off competition from a rival browser.

In a preliminary ruling, the European commission found the firm guilty of abusing Windows' market dominance to stifle competition for multimedia players by tying its Media Player video and music programme to the operating system.