West Virginia hits Microsoft with antitrust suit

Peter Kaplan

WASHINGTON: West Virginia's attorney general filed suit against Microsoft

Corp. in state court on Monday, alleging the company's business tactics violated

state antitrust and consumer protection laws.

State Attorney General Darrell McGraw filed the suit on behalf of West

Virginia consumers and state agencies, asking the court to impose unspecified

damages and sanctions against the company, an attorney representing the state

said.

West Virginia is one of nine states who have refused to join the Justice

Department in settling a federal case against Microsoft. The state lawsuit filed

on Monday would position the state to opt its 1.8 million residents out of a

separate but related class action settlement with the company, according to one

source familiar with the case.

The West Virginia lawsuit is based largely on the findings of US District

Court Judge Thomas Penfield Jackson, who ruled last year that Microsoft had

abused its monopoly in the market for personal computer operating systems.

It also cites two violations of West Virginia consumer protection law, one

that prohibits "unfair and deceptive practices" and another that bars

companies from selling products below cost "with the intent to destroy

competition," according to one source who has seen a copy of the lawsuit.

A spokesman for the company had no immediate comment on the lawsuit.

But the impact of the state lawsuit could fall mainly on a related proposal

to settle more than 100 class action antitrust suits that have been filed

against Microsoft in the wake of Jackson's rulings.

Those cases are being reviewed by a federal judge in Baltimore. Under the

proposal, Microsoft would make amends for its antitrust violations by spending

more than $1 billion to put software and computers into some of the poorest US

schools.

Microsoft, along with many of the class action attorneys in the suit, contend

the settlement is a creative solution that will put computers in the hands of

poor school children.

But class action attorneys from California have complained that the proposal

is a legal ruse that will further the company's dominant position in the

computer business. They argue the money should be returned directly to consumers

who purchased Microsoft software.

The dissenting attorneys, who have filed a case on behalf of California

consumers, will ask US District Judge Frederick Motz to strike down the

settlement or allow their lawsuits to proceed separately in California.

"There's a pretty high level of dissatisfaction about (the settlement)

among the (state attorneys general)," said one source familiar with the

case. By filing suit on behalf of West Virginia consumers on Monday, McGraw

could provide the basis to opt West Virginia consumers out of the class action

settlement.

Meanwhile, McGraw and eight other state attorneys general are still pursuing

the original, government case against Microsoft in US District Court in

Washington.

On Nov. 2 the company reached a settlement with the US Justice Department

designed to restore competition in the personal computer software market. Nine

of the 18 states involved in the case joined that pact within days. But the

remaining nine states are pressing ahead, insisting the sanctions on Microsoft

are not tough enough.

The remaining states are scheduled to file new documents with the district

court on Friday outlining their proposal for stricter remedies against the

company.

(C) Reuters Limited.