Judge doubts states' enforcement plan against MS

By Peter Kaplan

WASHINGTON: The federal judge, considering what antitrust sanctions should apply against Microsoft Corporation, expressed grave doubts on Friday about the enforcement mechanism proposed by nine states. U.S. District Judge Colleen Kollar-Kotelly criticized as "odd" and "unusual" the states' proposal that would direct future complaints against Microsoft to a court-appointed "special master," rather than the U.S. Justice Department.

"Obviously I have some concerns about it, as to how it would work," Kollar-Kotelly said after bombarding a states' attorney with critical questions about the plan. But the judge also fired off a blunt warning to Microsoft to observe whatever restrictions the court imposes for illegally preserving its monopoly in the Windows computer operating system.

"These are the kinds of things that will come back to haunt you if you don't (comply), because I will have a memory of all these statements," she said. The nine states, including California, Massachusetts, Iowa and Connecticut, have refused to sign on to a settlement reached in November between Microsoft, the U.S. Justice Department and nine other states.

Under the settlement, the Justice Department and Microsoft would appoint a three-person technical committee to field complaints and forward reports to the Justice Department. The Justice Department's Antitrust Division, with the advice of a three-person technical committee, would decide whether to take those complaints to court.

The non-settling states want the "special master" to investigate any allegations Microsoft was violating the antitrust sanctions. The special master would then try to settle any dispute out of court or make recommendations to Kollar-Kotelly on how it should be decided.

Kollar-Kotelly heard the arguments on the rival enforcement proposals on the eve of the fourth anniversary of the filing of the case. She has set June 19 for final arguments.

Microsoft attorney Rick Rule told Kollar-Kotelly that the states' plan for enforcing the sanctions was over-regulatory and "is bound to become a Software Commerce Commission, with your honor the high commissioner."

States' attorney John Shenefield responded that it would allow any disputes to be worked out within four months. "That is a quick, but not unduly quick, reasonable period of time." But Kollar-Kotelly rattled off a list of reservations.

She reminded Shenefield that an appeals court had struck down a similar "special master" arrangement in a dispute over a Microsoft antitrust agreement with the government that was the prelude to the current case. "This circuit has some very definite views about the use of special masters," Kollar-Kotelly said.

The judge went on to question why the states wanted the federal government to "abdicate" its enforcement role by handing oversight to the special master. And she criticized a provision in their plan that would allow disgruntled companies to take their complaints directly to court in many cases.

"Their interests may not be compatible, frankly, with the interests of the (government)," Kollar-Kotelly said. She also said the special master would be taking on too many roles as investigator, mediator and final arbiter of sanctions disputes. Shenefield conceded that the states' plan was unusual. But, he said, "There hasn't been an antitrust case like this one, either."

Shenefield said Microsoft would have strong incentives to try to wriggle out of the sanctions and the Justice Department could take too long to correct problems. "Delay is fatal where you're talking about nascent competitors that may never see the light of day," he said.

(C) Reuters Ltd.