Microsoft announced this morning that it has reached a settlement with the Taiwan Fair Trade Commission (TFTC) that will institute steep price cuts on its software sold in that country. The settlement officially ends an investigation into Microsoft's alleged unfair trade practices in Taiwan, which had charged the company with artificially inflating prices and forcing customers to buy more expensive software suites instead of individual applications. Microsoft says the price cuts average 26.7 percent.

"Microsoft believes our business practices have followed the regulations in Taiwan and our operations have, and will always be, in compliance with the law," Eunice Chiou, General Manager of Microsoft Taiwan, said in a statement. "We are committed to the terms of the settlement and look forward to delivering on our promise. We have great respect for the decision of the TFTC and have taken concrete steps in response to government and community sentiment."

Taiwan's investigation of Microsoft started last spring when the TFTC alleged that Microsoft sold software at a higher price in Taiwan than it did in other countries. After six months of investigation into the charges, Microsoft and the TFTC entered settlement negotiations last November.

In a related development, Microsoft also announced that it is launching a new Consumer and Academic Software Program on March 15 that will make the company's software even more affordable to consumers, educators, and students. The price of Windows XP Professional, for example, will fall 54.5 percent under the new program.