States Say They’ll Pursue MS

W A S H I N G T O N, Jan. 8, 2001 -- State attorneys general say they are determined to pursue the antitrust case againstMicrosoft Corp., even if the Justice Department, under incomingPresident George W. Bush, tries to back away.

Microsoft is appealing a trial court ruling that it abused its monopoly power and should be split in two to preventfurther antitrust violations. The U.S. Court of Appeals willhear oral arguments in February after top posts in the JusticeDepartment are filled by Republican appointees.

A top economic adviser to Bush has criticized antitrustenforcement under President Clinton, but opposition todropping the case from the states and some in Congress wouldmake it difficult to reverse course.

“We hope and assume that the Bush administration wouldfully pursue the Microsoft case through all stages, includingthe Supreme Court, if that’s necessary,” said Iowa AttorneyGeneral Tom Miller, leader of the 19 states that areco-plaintiffs in the case with the federal government.“However, if for some reason they don’t, we have made acommitment to pursue this case to the end.”

Bush Official Bashes Policy

The Clinton administration’s last hurrah will come onFriday, when it files a 150-page brief with the appeals courtahead of oral arguments on Feb. 27 and 28.

Until now, lawyer David Boies has argued the case for theJustice Department. He is unlikely to continue in that role.Boies argued for Vice President Al Gore before the U.S. SupremeCourt and lost a 5-4 decision that propelled Bush to thepresidency.

Even before that, the Bush camp had few kind things to sayabout Justice Department antitrust policy.

Bush’s recently appointed assistant for economic affairs,Lawrence Lindsey, said six months ago that the Clintonantitrust policy was “radical” and needed change.

Lindsey said at the Republican Convention in August that aBush administration would have “greater sensitivity” to“respecting the private sector and respecting the need forinnovation and profitability long-term,” specificallymentioning Microsoft.

States Take the Lead

The states have a new obligation in light of such remarks,said one of the leading state attorneys general in the case.

“I think the lead order has now shifted hands and thestates have it,” Connecticut Attorney General RichardBlumenthal said.

If the administration tries a new tack, it may also faceresistance on Capitol Hill.

Orrin Hatch, the Utah Republican who chairs the SenateJudiciary Committee, gave strong backing to the formerassistant attorney general for antitrust, Joel Klein, when hedecided to take the Microsoft case to trial.

The Judiciary Committee must approve Klein’s permanentsuccessor, and the administration is expected to consult withHatch before proposing a name for him to review.

The administration could try to short-circuit matters bysettling the case before the appeals court rules, but BillBaer, an antitrust lawyer with Washington-based law firm Arnold& Porter, said that it was “unlikely that a Bush administrationwould pull down the appeals process.”

Microsoft may find itself in a better negotiating positiononce the court rules. In 1998, the Court of Appeals ruled forMicrosoft in a related Justice Department matter.

No More Breakup?

The appeals court may not entirely throw out the lowercourt ruling but could dump the order to break Microsoft up.

“Given the Court of Appeals’ history, it is likely to beskeptical about accepting a breakup as the proper remedy,” saidSteve Sunshine of “global law firm” Shearman & Sterling.

If the court agrees that Microsoft violated the law, hesaid, “the question becomes what to do about it.” That wouldmost likely be the time for settlement talks, but the statesare concerned about the terms.

Iowa’s Miller said there would have to be substantialchange in the way Microsoft used its monopoly in themarketplace for the states to agree to a settlement.

“If there is something less than that, we are committed topursue the litigation,” Miller said.

No Scot-Free Escape

Some analysts have speculated that Microsoft might try toreach an agreement that would remove any remaining legalliability. But an expert says that will not happen.

“The parties have no power to vacate a court decision,”said Andy Gavil, a professor of law at Howard University. Hesaid the government could ask the court to reverse the findingof liability as a condition of a settlement, “but it’s prettyunimaginable.”

Thomas Penfield Jackson, the trial judge, found in Junethat Microsoft illegally used monopoly power in the market forpersonal computer operating systems to exclude competitors, ineffect placing an “oppressive thumb on the scale of competitivefortune.”