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Lawyers said a federal judge’s approval of most of a settlement between the Justice Department and Microsoft in an antitrust case appears to slam the door on further proceedings. “I think it’s all done because Microsoft has got to be pleased as punch,” said attorney Mark Ostrau of Silicon Valley technology firm Fenwick & West. “The DOJ is happy because it got its settlement, even though it may have sold out a little bit cheap,” added Ostrau, the firm’s antitrust chair. U.S. District Judge Colleen Kollar-Kotelly on Friday rejected efforts by nine state attorneys general to toughen the settlement, and instead adopted most of what the DOJ had asked from the court. “The court is satisfied that the parties have reached a settlement which comports with the public interest,” Kollar-Kotelly wrote in her 97-page ruling. But the judge said that because Microsoft has a “tendency to minimize” the effects of its illegal conduct, she would be watching to ensure full compliance. In a conference call with reporters, several of the nine state attorneys general declined to say whether they would appeal the ruling. They said more time was needed to digest Kollar-Kotelly’s decision. California Attorney General Bill Lockyer said the decision was no clear-cut victory for either side. He said one disappointment was that the AGs had asked the court to “look ahead” at other products Microsoft makes to prevent similar antitrust behavior. Lockyer said the court instead “looked backward” at the company’s antitrust activities only in the operating system and browser market. Connecticut AG Dick Blumenthal took a shot at the Justice Department, which pushed for the settlement over the objections of the nine states. “It marks the first time the states, in a settlement, have achieved more than the federal government,” he said, referring to several provisions that he and his colleagues were able to write into it. “This case is stronger because we pursued stronger remedies,” he said. One of those remedies is an oversight compliance committee composed of independent company directors. In her ruling, the judge dismissed the AGs’ concerns “on grounds that they are unjustifiably in conflict with the imposition, as well as the rejection, of liability in this case.” Kollar-Kotelly’s finding requires Microsoft to disclose some of its technology to rival firms earlier than the DOJ had proposed. The sanctions on the firm will last five years. Richard Grossman, a partner at Townsend and Townsend and Crew, which is taking the lead in a California antitrust case against Microsoft, said the federal ruling would have no effect on that case. “Our case is to recover the overcharges that Microsoft imposed on our plaintiffs in what it charged and what it would have been able to charge in a competitive market,” Grossman said. He estimated the overcharges at $2.5 billion, which would be trebled under California law if plaintiffs counsel win. The case is set for trial Feb. 3. The state case alleges that Microsoft’s illegal conduct denied consumers competitive prices in violation of California’s Unfair Competition Act and of the Cartwright Act, which bars monopolists from acting in concert with others to restrain trade. San Francisco Superior Court Judge Paul Alvarado has tentatively ruled that plaintiffs attorneys could tell jurors in the state antitrust trial of the findings of fact issued by U.S. District Judge Thomas Penfield Jackson, which held that Microsoft abused its monopoly power. Although Jackson’s order breaking up the Redmond, Wash., firm was rejected, his legal findings remain intact. Donald Falk, an antitrust partner with the Silicon Valley office of Mayer, Brown, Rowe & Maw, said Microsoft came out smelling sweet with the settlement. “If this is as far as this case goes, Microsoft has gotten away with a massive monopolism without any penalty,” Falk said. “It’s like saying to the robber: Keep the money, but change your gun,” he said. “That shows how shallow [the settlement] is.” Fenwick’s Ostrau said the case also points out how ill-equipped the legal system is to pursue antitrust matters with the high-tech industry. “It takes too long, and the industry moves too fast,” he said. “We’ve got to go on to another battle.” Ostrau also said Microsoft is perhaps “more mature” now and will act as a responsible company. “Microsoft is like a kid who grew up too fast,” he added. Economist Thomas Lenard, a senior fellow at the Progress and Freedom Foundation, a conservative Washington, D.C., think tank, said Kollar-Kotelly’s decision reveals a tear in the free-market fabric. “It’s certainly sends the message that a company like Microsoft that has market power has few limits on it to act competitively — and if you don’t, the cost is not that great,” Lenard said. He added that “the previous administration’s Department of Justice did a better job than this one” in prosecuting the Microsoft antitrust case.

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