The European Commission said it had been unable to reach a settlement with Microsoft after considering the software group's last-ditch offer to end the long-running antitrust battle.
Mario Monti said on Thursday that it was important to set a legal precedent for the case, despite an offer from Microsoft on Wednesday to include its rivals' programmes on personal computers sold throughout the world.
"We made substantial progress towards resolving the problems which have arisen in the past but we were unable to agree on commitments for future conduct. In the end, I had do decide what was best for competition and consumers in Europe. I believe they will be better served with a decision that creates a strong precedent.
"It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market," Mr Monti said.
The European Commission is now expected to rule next week that Microsoft has unfairly used its virtual monopoly over personal computer operating systems to elbow out rivals in the markets for computer server systems and Media Player software.
The ruling is expected to call for Microsoft to share technical information with its rivals in the server market and supply computer manufacturers with a version of Windows without its Media Player programme. The Commission will also impose a fine that is likely to run into hundreds of millions of euros.
Following two separate meetings with Microsoft chief executive, Steve Ballmer, Mr Monti was faced with the choice of whether to accept concrete measures offered by the company on Wednesday or formally rule that the company has broken European law, so setting a historic precedent.
Mr Ballmer indicated on Thursday that Microsoft had not yet ruled out the prospect of a future settlement with the EU.
"We worked very hard to try to resolve these issues without litigation. Because of the tremendous value we attach to our relations with governments all across Europe, we made every possible effort to settle the case, and I hope that perhaps we can still settle the case at a later stage."
As part of Wednesday's offer, the software giant had promised to ask all computer manufacturers in the European Economic Area to include two media player programmes specified by the Commission on the hard discs of PCs. Another media player program, selected by the computer manufacturers, would also be included on PCs, with similar measures to apply outside Europe.
Such programmes, used to play video and music clips, are at the core of the fight between Microsoft and the Commission.
Microsoft has previously rejected claims that it should share more programming code with competitors and argues that its Media Player program is a key part of Windows.
However, Microsoft would like to avoid a formal censure by the Commission, and the additional prospects of legal precedent leading to a series of other potential cases throughout the EU.