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Now that Microsoft Corp. and the Department of Justice are approaching a settlement of their landmark antitrust case, the focus will soon shift to a phase that will allow outsiders to challenge the settlement. Under a relatively obscure 1974 law called the Tunney Act, a federal judge is supposed to approve the settlement of an antitrust case brought by the DOJ only if he or she finds that it is in the public interest. The act requires a 60-day period for public comment. Since United States v. Microsoft has been anything but the typical antitrust case, the Tunney Act process will be anything but usual. Hundreds of corporations, individuals and trade groups, both supporting and opposing the settlement, will likely file comments. After the 60-day period, the judge will hold a hearing and write an opinion either adopting or rejecting the settlement. Both supporters and opponents of the government’s case say they believe it unlikely that U.S. District Judge Colleen Kollar-Kotelly will use the act to block a settlement. Today, lawyers for the parties — the DOJ, Microsoft and 18 state attorneys general — will appear before Kollar-Kotelly and give the judge a progress report on the settlement talks that she jump-started in late September. Specifics of the tentative settlement are not known, but it is believed that Microsoft will agree not to prohibit computer manufacturers from installing non-Microsoft programs on their desktops. Apparently, Microsoft will not be barred from “bundling” new programs with its Windows operating system, a step that some in the industry have demanded. The government has already dropped its earlier demand that Microsoft be broken up. The only issues on the table are “conduct” remedies, which would regulate Microsoft’s behavior vis-�-vis its competitors and customers. The 60-day comment period doesn’t begin until the parties have actually signed the settlement and the accompanying consent order. Since Microsoft and the government have apparently agreed in principle on a deal but not yet reduced it to writing, it may be weeks before that period begins. “The whole point of the [Tunney Act] was to detect improper political influence,” says Robert Lande, an antitrust professor at the University of Baltimore who has been critical of Microsoft’s conduct. “No one is alleging that has occurred here. So I’d expect a quick rubber stamp.” The law was passed in the post-Watergate era to prevent abuses such as the alleged decision by the Nixon administration to settle an antitrust case in exchange for a $400,000 corporate contribution to the Republican National Committee. James DeLong, a senior fellow at the Competitive Enterprise Institute who opposes the government’s case, agrees with Lande. “I don’t know of any other cases, other than the earlier Microsoft case before [Judge] Stanley Sporkin, where the Tunney Act was used to reject a settlement,” DeLong says. DeLong was referring to a 1995 opinion by Judge Sporkin, now retired, that tossed out a consent agreement between Microsoft and the DOJ. At the time, Jeffrey Jacobovitz, who argued against the settlement in Sporkin’s court on behalf of the IDEA Corp., a small computer company, said he hoped the decision would force Microsoft to agree to a tougher settlement. Instead, Microsoft went to the U.S. Court of Appeals for the D.C. Circuit, which not only reversed Sporkin but also removed him from further involvement in the case because of perceived bias. Jacobovitz, now a D.C. partner and head of the antitrust practice at Omaha’s Kutak Rock, agrees that Kollar-Kotelly is likely to accept the settlement. After all, Jacobovitz says, the judge made it clear as soon as the case was assigned to her last summer that she wanted the case to settle. The major complication, Jacobovitz and others point out, will come if one or more of the state attorneys general refuse to sign on to the deal that the DOJ and Microsoft negotiated. At press time, the states, which recently brought in top litigator Brendan Sullivan Jr. of D.C.’s Williams & Connolly, were reported to be engaged in intense talks with the DOJ on the issue. “If the states oppose it, it will be a zoo,” says Jacobovitz. “It’s not at all clear what would happen. The judge can’t force the states to settle, but she can send signals that she is not viewing their arguments favorably.” Lande, the Baltimore professor, says that if the DOJ and some states endorse a settlement while others object, the case will be in “unclear territory.” In an unprecedented situation, the states might even be able to proceed with a trial even while the DOJ and Microsoft are pushing for approval under the Tunney Act. But Lande thinks the attorneys general will be operating from a position of weakness if they want to persist. “You’ll have this judge who thought it was in the public interest to settle, and now you’re trying to convince her that it’s not in the public interest. Good luck,” says Lande. Lande also points out that many state governments now face a fiscal crunch and “may simply not have the resources to continue, in light of the recession.” “Will enough states remain to pay the legal fees for Brendan Sullivan and his associates?” Lande wonders.

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