Microsoft escapes new sanctions
By Jonathan Krim
The Washington Post
WASHINGTON — Microsoft Corp. won a resounding victory in its antitrust case yesterday after a federal judge in Washington rejected and at times belittled efforts by state prosecutors to impose stiffer sanctions on the company than it agreed to in a settlement with the Justice Department.
Bloomberg News Service
U.S. District Court Judge Colleen Kollar-Kotelly embraced, with minor changes, the settlement struck last winter aimed at addressing Microsoft's violations of anti-trust laws. Her series of rulings, the latest in the most bitterly fought antitrust case in a generation, represents a remarkable legal turnaround for a company that two years ago faced the prospect of being broken up.
A federal judge adopted most of an antitrust settlement between the Bush administration and Microsoft, refusing to impose additional restrictions on the company.
The agreement, which imposes a series of restrictions on Microsoft's business practices, was widely assailed as a sellout and filled with loopholes by an array of legal scholars and Microsoft's corporate competitors. Nine states and Washington, D.C., refused to sign onto the deal and pursued the additional sanctions, arguing that Microsoft was a serial lawbreaker that could not be trusted to live by a weak, vague agreement.
After a federal appeals court ruling that Microsoft had committed numerous anticompetitive acts in quashing a rival Internet browser and other technologies, they asked the judge to protect technologies that might not yet pose a threat to Microsoft, but might one day soon in the fast-moving digital age.
But Kollar-Kotelly sided fully with the computer software company and the Justice Department, and all but ridiculed the states for the legal theories they put forth to justify tougher restrictions on Microsoft.
Settlement praised
Rather than allowing the federal settlement to go forward, the judge wrote, the states "sought to gather all existing complaints regarding Microsoft's business practices and bring them before the Court at this late stage in the case." In doing so, she wrote, the states showed "little respect" for the appeals court ruling last year that upheld key antitrust findings against Microsoft but rejected others, threw out a breakup order and proscribed caution in how its violations should be rectified.
The judge also went out of her way to praise the federal settlement, which resulted from intense mediation that she ordered late last year. Nine states that were part of the original prosecution also signed onto the deal.
Rejecting many of the criticisms leveled at the agreement, Kollar-Kotelly instead called the settlement "laudable ... for the clear, consistent and coherent manner in which it accomplishes its task."
Microsoft Chairman Bill Gates, who pledged in court testimony last spring to assiduously live by the terms of the agreement, said at a press conference that the decision "gives us the freedom to continue innovating for our customers."
Gates said the company recognizes that it faces close scrutiny by the government and competitors.
In her ruling, Kollar-Kotelly also made clear that she would be watching how effectively the agreement was being enforced and withheld final approval of the agreement until the Justice Department strengthened a provision that ensured the court's role in evaluating compliance of the deal.
In a statement, the Justice Department praised the ruling and pledged aggressive enforcement of the settlement, which would last at least five years, unless Microsoft violates the terms.
Ruling criticized
Reaction from corporate competitors was muted. AOL-Time Warner Inc. general counsel Paul Capuccio criticized the ruling, but said he hoped that a pending antitrust case at the European Commission, along with class-action lawsuits and private actions brought by AOL and Sun Microsytems Inc., would help keep some reins on Microsoft.
Mark Ostrau, head of the anti-trust practice at the law firm of Fenwick & West in Silicon Valley, said that the decision demonstrates the difficulty of making antitrust law work with technology.
"If there is any precedent at all that it sets, it's that the regular legal process is incompatible with the high-tech industry, and if someone seriously expects to get material legal remedies they have to be done very quickly, cleanly and to the point," he said. "Laser shots, rather than shotguns."
