MICROSOFT has begun a campaign to reduce software theft in Ireland, which it claims has cost software producers £25.5 million.

The campaign is aimed at computer dealers who load illegal software on to machines, and also at large and small companies which have pirated software running on their personal computers.

Microsoft, which employs 800 people at its European headquarters in Sandyford, Dublin, plans to educate companies about software theft, but will also take legal action against the pirates. The level of software theft in Ireland is "a national disgrace, according to Microsoft's country manager for Ireland, Ms Ann Riordan.

According to a Price Waterhouse study for the Business Software Alliance, which represents software publishers worldwide, more than half of all business applications software used in western Europe are illegally copied. The estimated Irish rate of software piracy is 82 per cent, the highest level in the EU and more than twice the European average.

The study estimates that $4.8 billion dollars in European software sales have been lost because of software piracy.

If European illegal copying was reduced to the American level of 35 per cent, 87,000 new jobs would be created in the industry in Europe, according to the Price Waterhouse study.

Ms Riordan argues that all European piracy has an impact, on Ireland due to the high number of international software companies located here.

"Software theft directly affects Ireland because it's in Ireland that these products would be produced," she said.

These estimates are based on the assumption that all those who copy software would have purchased the product if they had not been able to copy it, but Microsoft argues that if piracy was reduced, the price of software, would also fall.

Mr David Sanfey, a partner in, solicitors A&L Goodbody, which Microsoft has retained to aid the campaign to reduce software theft, said there was "an arsenal of weapons" that could be used against the pirates. Counterfeit products could be seized, while, Microsoft could also obtain an injunction to enter the premises of large scale pirates.