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Appeals court question ruling on Microsoft

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CIOL Bureau
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Peter Kaplan

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WASHINGTON: An appeals court questioned on Tuesday a government plan to split

Microsoft Corp. and raised doubts about the credibility of the trial judge who

ruled that the company had violated antitrust laws.

For the second consecutive day, the appeals judges bombarded government

attorneys with questions about whether the violations warranted breakup, whether

dividing Microsoft would truly promote competition, and why there had been no

full hearing on the split.

Several judges on the seven-member panel raised the possibility of throwing

out one or two of the three major findings against Microsoft and upholding only

the charge that the company illegally maintained its monopoly in personal

computer operating systems.

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That could mean sending the case back to the district court level to

reevaluate the remedy part of the trial, said Judge David Sentelle. "Don't

we have to re-litigate remedy if we strike down any of your case?" Sentelle

asked Justice Department counsel David Frederick.

violates the whole code of office. The system would be a sham if all judges went

around doing this," he said.

The critical comments comes close in the heels of a book published after the

trial ended by a journalist who has claimed to have interviewed Jackson twice

during the trial. In those interviews, the judge reportedly compared Microsoft

executives' to a street gang and criticized the appeals judges for overturning

one of his earlier rulings.

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Microsoft has argued that the out-of-court comments show Jackson was biased

and asked the appeals court to void all of his rulings. The US Department of

Justice and 19 states contend the statements shouldn't affect the trial because

they were published after Jackson ruled on the case.

This prompted Judges Sentelle and Stephen Williams to ponder aloud on whether

they should show deference to Jackson's findings of fact, given his remarks.

Meanwhile, stock of Microsoft fell 3/16 to $59-3/8 at the close of the Nasdaq

market Tuesday in a down day for tech stocks generally. The stock had gained

Monday, partly on the start of the appeals case, analysts said.

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Chances of breakup slim



On June 7, Jackson had ordered the breakup of the company to prevent future
antitrust violations, and set other remedies, all of which he suspended pending

appeal.

Jackson had found Microsoft holding monopoly in the market for personal

computer operating systems with its Windows product and illegally using the

advantage, including integrating its Web browser into Windows and refusing to

offer them separately.

Legal analysts say the appeals judges are unlikely to void all Jackson's

rulings and start the trial over again. But Jackson's remarks could make it

easier for them to strike down the break-up remedy and many of Jackson's other

rulings. "He doesn't get the benefit of the doubt, and Microsoft's are

elevated in importance," said George Washington University law professor

William Kovacic, who attended the hearings.

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Edwards raised other discrepancies in Jackson's ruling during Tuesday's

arguments. He said the trial court was 'absolutely unclear' in reaching findings

that Microsoft had acted illegally in trying to monopolize the market for Web

browsers. "There are these sleights of hand about whether we're talking

about a browser market or whether we're talking about the platform market. You

can't have it both ways," said Edwards.

The government charges Microsoft of having offered Netscape a deal in 1995 to

divide the browser market. But the argument that the step was taken by Microsoft

with the view of gaining a monopoly over the browser market, according to Judge

Tatel said, was "awfully speculative."

Microsoft has consistently denied having proposed to divide the browser

market at a June 1995 meeting with Netscape Communications Corp., now owned by

AOL Time Warner. Richard Urowsky, arguing for Microsoft, said any attempt to

manipulate the browser market would have failed, as there were so many other

browsers available to consumers at that time.

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There had also been signals Monday that the appeals court was skeptical of

Jackson's ruling. The appeals judges had reserved the toughest questions for the

government's lawyers, quizzing them on whether destroying Microsoft's monopoly

might simply result in another firm's dominating the market. "I don't think

we're going to see a breakup," Kovacic said.

Chief judge Edwards also criticized some of Jackson's other findings as

unfounded. Even before the arguments began, legal analysts believed the US Court

of Appeals, which ruled for Microsoft in a related matter in 1998, represents

Microsoft's best chance to overturn or substantially weaken Jackson's ruling.

There has been speculation that weakening of the case by the appeals court

could lead to imminent settlement talks between Microsoft and the new

administration of President George W Bush. The landmark antitrust case, filed in

May 1998, is the biggest since the government took AT&T Corp. to court,

resulting in the 1984 breakup of the company into regional telephone companies.

(C) Reuters Limited 2001.

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