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The marathon Microsoft litigation has spawned a host of important legal questions. Early on, the D.C. Circuit was forced to delineate the circumstances under which a district court judge could refuse to sign an antitrust consent decree. Later, that same appeals court refused to allow another district court judge to delegate most of his authority to a special master. And still later, the D.C. Circuit kicked the trial judge off the case for ethical lapses that “call into question the integrity of the judicial process” — even as it let his factual findings stand. The latest turn of events in the case poses an even more important question: Can a handful of state attorneys general effectively make national antitrust policy, superseding the Justice Department by asking for remedies that conflict with the DOJ’s choices, without running afoul of the supremacy and commerce clauses of the U.S. Constitution? The constitutional issue emerged after the DOJ and nine states entered into a proposed consent decree with Microsoft, while nine other states demanded far harsher relief. (Thirty-two other states, it is worth remembering, were either not parties to the suit or had withdrawn earlier.) The Justice Department’s brief argues that, in light of the D.C. Circuit’s earlier ruling, the district court has limited authority to reject a proposed consent decree. Justice was particularly forceful in rejecting as “legally flawed and ill advised” a proposal to link the federal public interest determination in the Tunney Act hearing with the state remedies hearing: “Were the Court to follow the suggestion, it would undermine the foundations of the Tunney Act, bring into question the authority of the Department of Justice to settle lawsuits, threaten the viability of the consent decree as a tool of antitrust enforcement and risk serious damage to federal/state cooperation in the prosecution of antitrust cases.” In its motion, Microsoft observed that “virtually every sentence” of the states’ remedy proposals conflicts with the proposed decree that Justice declares is in the public interest. This conflict, Microsoft suggests, raises a basic constitutional question. Permitting nine states to promulgate national antitrust policy “would lead to enforcement chaos” as each of the 50 states “would be elevated to the same status as the United States,” with each free to pursue “its own idiosyncratic vision of the ‘public interest.’ “ MICROSOFT’S ARGUMENTS Some of Microsoft’s constitutional arguments face an uphill struggle, though even without those arguments, Microsoft’s case seems strong. One of the tougher arguments for Microsoft to support is the claim that, under traditional pre-emption principles, it is unconstitutional for a state to seek antitrust relief “that overrides relief already obtained by the United States.” This claim must overcome a series of U.S. Supreme Court decisions rejecting pre-emption challenges to state antitrust enforcement. A close reading of the Clayton Act will play a key role in delineating when states can seek their own antitrust claims. Microsoft’s claim that by seeking “sweeping nationwide relief under the federal antitrust laws,” the litigating states are exercising “significant authority pursuant to the laws of the United States” in violation of the appointments and take care clauses of Art. II of the Constitution, plies uncharted waters. But there are still strong constitutional grounds for booting the state AGs. In essence, Microsoft argues that the states are interfering with the conduct of national antitrust policy. That claim fits most comfortably–and powerfully–under the heading of unconstitutional extraterritorial state action under the commerce clause. In Connecticut v. Massachusetts, the Supreme Court made clear that “all states stand, in point of power and right” on “an equal level or plane.” And in BMW v. Gore, the Court declared that the Constitution prohibits a “single state” from imposing its “own policy choices on neighboring states.” Microsoft rightly argues the “prohibition on extraterritorial application of state law applies to state policy implemented through a judgment in litigation, as well as to direct or regulatory action by the State.” This issue is central to our concept of constitutional federalism and federal supremacy. The drafters of the Constitution declared in Art. I, Sec. 10, that “No State shall, without the Consent of the Congress … enter into any Agreement or Compact with another state.” And in Virginia v. Tennessee, the Supreme Court ruled that that compact clause is directed at the formation of any combination “which may tend to increase and build up the political influence of the contracting States, so as to encroach upon or impair the supremacy of the United States.” Whichever clause of the Constitution is invoked, Microsoft seems on rock-solid ground. It is unconstitutional for nine states to dictate national antitrust policy, over the objection of the federal government and nine other states and without the accord of the remaining 32 states. Leonard Orland, a professor at the University of Connecticut School of Law, has served as a consultant to Microsoft.

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