States Have Right to Seek Nationwide Penalties Against Microsoft

Nine states fighting to bring stronger antitrust sanctions against Microsoft cleared a legal hurdle Wednesday as a federal judge in Washington, D.C., decided they have the right to seek penalties that would apply nationwide. Microsoft had asked for a dismissal, saying the states couldn't show specific harm to their residents and that their pursuit would clash with a federal settlement reached in November.

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Nine states fighting to bring stronger antitrust sanctions against Microsoft cleared a legal hurdle Wednesday as a federal judge decided they have the right to seek penalties that would apply nationwide. Microsoft had asked for a dismissal, saying the states could not show specific harm to their residents and that their pursuit would clash with a federal settlement reached in November. “Microsoft quotes selectively from a number of cases with the effect of mischaracterizing their holdings,” U.S. District Judge Colleen Kollar-Kotelly wrote in response to the settlement argument. “The court finds this tactic unpersuasive.” “The court concludes that Microsoft’s motion is without merit and must be denied,” Kollar-Kotelly wrote. She agreed with the states’ argument that an appeals court already considered whether they have antitrust authority, and did not question it. Before her ruling, the judge asked the Justice Department for its opinion. Department lawyers — as well as representatives of 25 other states that backed up the nine attorneys general — agreed that the states should be able to bring their case. The department, which made its own far more lenient settlement with Microsoft last year, maintained its opposition to the nine states’ call for stricter penalties. Kollar-Kotelly has yet to rule on whether to grant the states’ request for those penalties or whether to approve the federal settlement. The judge’s opinion, one of the few comprehensive decisions in the complicated case, gave Microsoft’s lawyers little slack. Microsoft “merges and mingles a number of distinct doctrines” in its arguments, she wrote. A final footnote noting Justice’s objections was the only reference sympathetic to Microsoft in the 35-page opinion. “The court has yet to determine whether these policy considerations will inform the court’s exercise of its equitable powers in devising a remedy in this case,” Kollar-Kotelly wrote. Microsoft has two other important motions pending. One asks for the case to be thrown out because of a lack of evidence from the states. The second would do away with the harshest proposal penalty against Microsoft: forcing the software company to create a version of the Windows operating system that would allow computer makers to swap out some features in favor of those made by Microsoft competitors. State representatives said they were pleased by the judge’s ruling. “The decision confirms the rightful role of state attorneys general to prosecute antitrust violations,” Iowa Attorney General Tom Miller said. “Now we can almost see the finish line in this case.” Microsoft spokesman Jim Desler said the company “had hoped for a different outcome on this particular issue. We look forward to the next step of this process and presenting our closing arguments.” Kollar-Kotelly presided over two months of hearings, starting in March, in which Microsoft Chairman Bill Gates and executives from other top technology companies debated the states’ proposals. The states say the federal settlement will not go far enough to restore competition in the software industry. They say their proposals, which include making Microsoft give up most rights to its Internet Explorer Web browser, are more likely to increase consumer choice and promote innovation. Kollar-Kotelly noted in her order that her ruling in the antitrust case could set an important precedent. “This case has been unique from its inception and has continued to distinguish itself,” the judge wrote. Microsoft was found by a federal appeals court to have used illegal means to stamp out nascent competition in order to protect its Windows monopoly. The original judge in the antitrust case, Thomas Penfield Jackson, ordered Microsoft broken into two companies. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment. Both the states and Microsoft are scheduled to deliver closing arguments June 19. A ruling is expected in late summer. States that rejected the government’s settlement with Microsoft last fall and are pressing for tougher penalties are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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