Microsoft Hearing Could Conclude the Case Appeals Judges to Consider Challenges to Antitrust Accord By Jonathan Krim Washington Post Staff Writer Saturday, November 1, 2003; Page E01
For Microsoft Corp., an unusual U.S. appeals court hearing next week could bring the most ignominious chapter in the company's storied history to a close. For those who think the software giant has all but gotten away with breaking antitrust laws, the hearing will probably be the final shot at redress. For the Justice Department, it will be a chance for affirmation that its heavily criticized handling of the case has been appropriate. On Tuesday, the U.S. Court of Appeals for the D.C. Circuit will hear challenges to an antitrust settlement between the Justice Department and Microsoft in late 2001. Several states that helped prosecute the company signed on to that deal. Another group of states pressed for stiffer sanctions but were largely rebuffed by a lower-court judge after two months of hearings this year. They won a separate settlement with slight modifications, and most decided not to push any further. But one state, Massachusetts, refused to give up the case, which has been running for more than five years. "If this is the remedy in a case of this magnitude, then there is little reason why any monopolist, or would-be monopolist, should hesitate to embark on a similar course of unlawful conduct," the state said in legal briefs challenging the settlement approved by U.S. District Judge Colleen Kollar-Kotelly. "The flaws in the remedy adopted by the district court are profound." Two technology trade groups also are challenging the Justice Department's settlement. Many legal experts say the challengers have a tall hill to climb: They must show that the judge abused her discretion, a difficult task in any legal case. But what makes next week's hearing unusual is that the seven judges scheduled to hear the appeal are the ones who in June 2001 upheld several findings of Microsoft violations but rejected a trial judge's order that the company be broken up. They sent the case back to the lower court with new guidelines for determining how the violations should be addressed. The appeals court also tossed out the original trial judge, Thomas Penfield Jackson, for mishandling aspects of the case and improperly talking to the media about it. Kollar-Kotelly was assigned in his place. Whether Kollar-Kotelly followed those guidelines is central to the appeal. "The District Court's remedy will not restore competition, deny Microsoft the fruits of its illegal conduct or otherwise satisfy this court's remedial objectives," Massachusetts argues. In its filings, Microsoft counters that "the suggestion that the District Court disregarded this court's mandate is baseless." In one example of the dispute, the appeals court held that the world's largest software maker illegally protected its Windows monopoly by co-mingling the code for its ubiquitous operating system with the code for its Internet browsing software. The court ruled that such bundling was an unfair barrier to rival browser makers. In its settlement, the Justice Department elected not to force the company to unbundle the code. Instead, the deal gives computer makers and users the ability to mask access to Microsoft programs and show preference to rival software if they so choose. The states said that was insufficient because non-Microsoft developers would know that the company's programs still reside on the computer and would still write more applications based on Microsoft's platforms. Kollar-Kotelly sided with Microsoft and the Justice Department, rejecting a plan by the states that would have required Microsoft to offer a stand-alone version of Windows if it wanted to continue to offer a version with other programs bundled into it. "There is a broad zone of discretion" for the judge, said Paul M. Smith, a Washington antitrust lawyer. As for the well-established doctrine that antitrust remedies should deny the lawbreaker the fruits of its actions, Smith said a judge can decide that such a course is not feasible. Jeffrey Shohet, an antitrust lawyer in San Diego who has followed the case, agreed that the appeals court is likely to give the lower court wide latitude. Shoet added that the appeals court is not likely to judge whether the settlement might open the gates to future illegal behavior by would-be monopolists. That role, he said, is the Justice Department's. Separately this week, the leaders of the Senate Judiciary Committee's antitrust subcommittee, Sens. Mike DeWine (R-Ohio) and Herb Kohl (D-Wis.) introduced a bill to require courts to more thoroughly review antitrust settlements.
