Microsoft has denied Windows 7 customers in Europe will have to pay more for the OS because of issues with antitrust regulators.

Bill Veghte, the senior vice-president for the Windows business group, told the Financial Times: "Nothing about this [case] will mean higher prices for Windows 7 in Europe".

Veghte was responding to the FT's claims last week that because Microsoft has unilaterally decided to strip Internet Explorer 8 (IE8) from Windows 7, Vista users would need "a fuller version of the new software when they upgrade".

The newspaper, however, also made it clear that Microsoft was selling that software, dubbed 'Full' or 'Full Packaged Product' (FPP) to differentiate it from editions labeled 'Upgrade'.

Microsoft has said it will price the full Home Edition of Windows 7E - the 'E' stands for Europe - at the lower price of £79.99 until at least December 31, 2009. Windows 7E is part of Microsoft's campaign to head off European Union antitrust regulators, who have charged the company with illegally tying Internet Explorer (IE) to Windows, from imposing even more drastic sanctions.

Microsoft is making the price concession on Windows 7 because of technical issues involving upgrades from Windows Vista. Microsoft will block customers in the EU from doing 'in-place' upgrades, which would leave some version of IE on the machine. So it will not be selling 'Upgrade' editions in the market - at least not when Windows 7 launches in late October.

"We typically offer two Windows versions to retail customers: a full version for use on any computer and an upgrade version - at a lower price - that can only be used on computers that are already licensed for Windows," said Veghte.

"In light of recent changes we made to European versions of Window 7, we will not have an upgrade version available in Europe when we release the new operating system."

The 'full' version of Windows Professional will cost £219.99 in the UK or $361.67 in US dollars, that's nearly twice the $199.99 US price.

Microsoft told PC Advisor's sister publication Computerworld that this is because the UK prices include the VAT but US prices do not include state tax. However, Microsoft was unable to provide pre-VAT prices.

"There is no way to quote you the prices without VAT without misleading people about what they will pay since VAT is always included," a spokesperson said.

At some point after 31 December - the only date Microsoft has given as a possible end to the lower 'Upgrade' pricing - the company could conceivably figure out the technical issues involving 'in-place' upgrading Vista, which has a browser, to Windows 7, which won't. With a true 'Upgrade' edition available, Microsoft would, Veghte indicated, increase the price of the 'Full' versions.

The full version of Windows 7 Home Premium will cost £149.99 in the UK and $199.99 in the US.