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The misuse of antitrust law by companies seeking to thwart competition at the public’s expense has become an epidemic in recent years. Hopefully, this summer’s decision in the Microsoft case will turn the tide and discourage future attempts to use antitrust law to undermine competition rather than protect it. On June 30, the U.S. Circuit Court for the District of Columbia soundly rejected the state of Massachusetts’ arguments for tougher sanctions against Microsoft in the landmark antitrust case. The appeals court unanimously upheld the district court’s final judgment, which approved the settlement that Microsoft had reached with the U.S. Department of Justice (DOJ) and several states. In addition to its importance as the presumed end of an epic six-year antitrust battle, the long, thorough opinion also reaffirms and expands upon one of the most important principles of antitrust law, to “protect competition, not competitors.” The opinion goes on to establish an important corollary to that principle: that antitrust remedies should not attempt to guarantee competition-which could only be done, if at all, by protecting specific competitors-but instead should maintain the conditions under which competition can thrive to the extent permitted by underlying market and technical realities. These crucial distinctions were at the heart of the disagreement between supporters of the settlement (most notably DOJ and Microsoft) and its detractors. Massachusetts and two trade groups representing Microsoft’s competitors sought a number of sanctions that went far beyond the district court’s final judgment, including the hampering of Microsoft’s ability to improve its Windows operating system by integrating new features. Microsoft’s ability to do that was important, not only for its ability to compete with Apple, Linux and others in the operating systems market, but also for its ability to compete in the server market that is, ironically, dominated by the very companies (such as Sun) that led the attack on the final judgment. The final judgment (as approved on appeal) requires Microsoft to provide rivals with fair access to the Windows operating system, but does not preclude it from adding new functions to Windows or from competing in any market. On this issue, then, both courts chose to protect competition rather than competitors. Massachusetts and its allies also wanted Microsoft effectively removed from the field of competition for Internet browsers and, ultimately, from the server market. They tried to force Microsoft not only to strip Internet Explorer code out of Windows, but also to make the product “open source” so that its inner workings would be available to anyone, without a licensing fee. Again, an effort to further competitors’ interests at the expense of real competition. The lower and upper courts rejected that ploy; indeed, the appeals court praised the lower court for not “intruding itself into the design and engineering of the Windows operating system,” as Massachusetts had wanted. And the court agreed that requiring Microsoft to strip code out of Windows would not only degrade the product, but also hurt independent software vendors whose businesses depend on Windows functionality. Competition vs. competitors In other words, restricting innovation and hamstringing an effective company, though doing so may help competitors, are not effective ways to protect competition and benefit consumers. They should therefore be avoided. As the court put it, there is a difference between redressing harm by aiding the injured party, and doing it by “restoring conditions in which the competitive process is revived” so that competitors may sink or swim on their own merits. Massachusetts sought some of its exceptionally harsh remedies as a way to deny Microsoft the fruits of its allegedly anti-competitive conduct. But the appeals court noted that this conduct derived not from Microsoft’s innovative technology, but from the company’s temporary freedom from robust competition. The proper remedy, then, was not to destroy-or to nationalize-Microsoft’s technology (to the benefit of specific competitors), but rather to restore competitive conditions. That was the basis on which the court concluded that the district court “reasonably identified opening the channels of distribution for rival middleware . . . as an appropriate goal for its remedy.” The court of appeals’ opinion vindicates the pro-competition, pro-consumer principles that should be the hallmark of our antitrust laws. It is to be hoped that this will dissuade others from using antitrust laws to hamstring competitors at the expense of consumers. Gene Schaerr, an appellate and antitrust attorney in the Washington office of Sidley Austin Brown & Wood, serves as antitrust counsel to the Association for Competitive Technology.

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