U.S. out of Microsoft case

0 Comments | Deseret News (Salt Lake City), May 27, 2003 | by Bloomberg News

WASHINGTON -- The Bush administration won't weigh in on the appeal by two states seeking tougher restrictions on Microsoft Corp. than the world's largest software maker negotiated to settle the government's landmark antitrust case.

West Virginia and Massachusetts are appealing the refusal of a trial judge to impose more restrictions on Microsoft's conduct than the company accepted in a settlement with the Justice Department and nine other states.

After stating in February that it might file a brief, the U.S. Justice Department notified the U.S. Court of Appeals for the District of Columbia Circuit that it won't offer arguments. The department said in a May 21 letter to the court that it decided after reviewing the states' brief not to participate in the case, scheduled for argument Nov. 4 before seven appellate judges.

By staying out of the case, the Bush administration helps West Virginia and Massachusetts because it is "leaving the defense of the settlement to Microsoft," said Andrew Gavil, who teaches antitrust law at Howard University in Washington. "Microsoft simply doesn't have the same stature and credibility as would" the Justice Department in defending the settlement.

The Bush administration negotiated the settlement in 2001 after the appeals court held that Microsoft had illegally protected its Windows monopoly for personal computer operating software. The agreement requires Microsoft to give computer makers freedom to promote rival software that competes with products such as the Internet Explorer Web browser and Windows Media Player for downloading video and audio programming.

Nine states, led by New York, Pennsylvania and Wisconsin, joined the Justice Department in signing the settlement that was approved last November by U.S. District Judge Colleen Kollar-Kotelly in the District of Columbia. Nine other states, including Utah, California, Connecticut and Iowa, sought additional remedies.

Kollar-Kotelly held 32 days of hearings on proposals by the dissenting states. These included a plan to force Microsoft to make a version of the Windows operating system from which Internet Explorer and Media Player could be easily removed by computer makers.

She rejected most of the proposals while ordering Microsoft to disclose a wider range of software codes to competitors than the company had agreed to do in the settlement.

West Virginia and Massachusetts appealed Kollar-Kotelly's rulings after the other seven hold-out states abandoned the fight and accepted the settlement. The case is now before the appeals court.

In their brief, the two states said Kollar-Kotelly accepted the settlement without citing evidence "how its remedial provisions will effectuate any meaningful change in the marketplace." The settlement "will not restore competition, deny Microsoft the fruits of its illegal conduct" or "fulfill even the most basic mission of stopping all the practices" found illegal, the states said.

The Justice Department may have opted to stand on the sidelines because filing a brief "immediately puts them in a defensive position" of "having to defend the settlement," Gavil said.

"I am a little surprised the government didn't come in and say the states are not entitled to get more," said Ernest Gellhorn, who teaches antitrust law at George Mason University law school in Arlington, Va. "If I settled the case, I would want to defend it. This is an action that may raise questions."

The Justice Department helped West Virginia and Massachusetts by staying out of the case, Gavil said, because the judges "are going to be more inclined to show some deference to the federal government."

Gellhorn said the Bush administration's decision is a "neutral action." The appeals court "knows its own mind in this case and isn't sitting there breathless waiting for the government to file a brief."