Microsoft changes proposed settlement, but case to drag on

Peter Kaplan

WASHINGTON: Microsoft Corp. and the government said on Wednesday they will

make changes to their proposed antitrust settlement, as the judge overseeing the

case laid out a schedule that would likely stretch court hearings through

mid-May.

Neither side would elaborate on what the changes would be, but Microsoft

spokesman Jim Desler said they came in response to public comments submitted on

the settlement. In the past the company has said any changes would be minor.

A spokeswoman for the Justice Department, which will make its case for the

settlement in a separate filing, confirmed the two sides had agreed to changes.

The changes will be contained in legal briefs that the two sides expect to file

with the court late Wednesday night.

In a landmark ruling on the case in June, a federal appeals court upheld a

lower court conclusion that Microsoft had used illegal tactics to maintain its

Windows monopoly but rejected splitting the company in two to prevent future

violations.

Meanwhile, US District Judge Colleen Kollar-Kotelly issued an order giving

Microsoft, and nine states seeking tougher sanctions against the company, 100

hours each to question a combined total of 47 witnesses in hearings on

additional remedies.

Microsoft reached a deal with the Justice Department in November to settle

the nearly four-year-old case by, among other things, agreeing to give computer

makers more freedom to feature rival software on the machines they sell.

Nine states want stricter sanctions



Nine of the 18 states in the lawsuit agreed to sign on to the deal, but nine
others are pressing ahead and asking Kollar-Kotelly to impose stricter

sanctions.

Those remedy hearings are to start March 11, after a separate hearing

beginning March 6 on whether the settlement proposal is in the public interest.

Kollar-Kotelly on Wednesday denied a request by the states to bar more than a

dozen last-minute witnesses that Microsoft plans to call to argue against the

more severe sanctions sought by the non-settling states.

The states had accused Microsoft of trying to delay the proceedings and

argued that the judge should not allow Microsoft to present 16 of its witnesses.

In additional legal manoevers on Wednesday, Microsoft asked Kollar-Kotelly to

dismiss the harsher sanctions sought by the non-settling states, saying the

states are trying to "displace" the Justice Department's decision to

settle the case.

Microsoft told the judge that the nine states still pursuing the case are

overstepping their authority by proposing sanctions that go beyond the Justice

Department's settlement.

"Under well-settled legal and constitutional principles, the

non-settling states are limited to seeking redress for state-specific injuries

caused by Microsoft's conduct," Microsoft said in its brief. "They

cannot displace the United States in its role of establishing national

competition policy."

The dissenting states, which include California, Massachusetts and Iowa, say

their remedies would close a series of loopholes in the Justice Department

settlement. It also would force Microsoft to sell a cheaper, stripped-down

version of its monopoly Windows operating system and disclose the inner workings

of Windows.

Microsoft has criticized the states' proposal as radical and harmful to

consumers.