Microsoft settles Arizona anti-trust suit

Ben Berkowitz

LOS ANGELES: Microsoft Corp. will offer as much as $105 million in product vouchers to settle an Arizona class-action lawsuit accusing it of using its monopoly power to overcharge for software.

The Arizona settlement, approved by a judge on Monday, concluded nine months of talks and comes as Microsoft looks to put anti-trust claims behind it. The world's largest software maker has now settled such lawsuits in 11 states and the District of Columbia.

The Redmond, Washington-based company is also appealing a $600-million fine levied against it by the European Commission, as well as an order that it sell a version of Windows without media player software.

The plaintiffs' attorneys said the Arizona settlement, given preliminary approval by Maricopa County Superior Court Judge Michael O'Melia, covers businesses and consumers who bought Microsoft products in the state from 1996 to 2002.

Brian Goodwin, one of the class attorneys, said the deal covered a total of 7.8 million software licenses in Arizona.

Eligible users in Arizona who apply under the settlement would get vouchers of $15 for their past operating system purchases and $9 for past application purchases.

The settlement, apart from related fees and administration costs, will cost Microsoft between $52.3 million and $104.6 million, depending on how many vouchers are issued and used.

The settlement also includes a provision that some Arizona public school districts will get half of the value of any unclaimed vouchers, and then half the value of any vouchers that have been claimed but have not used to redeem software or computer-related hardware products.

Microsoft will fund the settlement from reserves already set aside for such claims, the company said.

"We're pleased by the opportunity to help schools all across Arizona get the computers and software they need," said Brad Smith, general counsel for Microsoft, in a statement. "The novel approach we've taken in structuring this settlement has not only allowed us to resolve this legal matter, but provide needed benefits to students at the same time."

Goodwin, the plaintiffs attorney, said that the settlement was the second-highest for Microsoft on a per-user basis, behind its $1.1 billion deal for California consumers in 2003.

The Arizona lawsuit had been certified as a class action in November 2000 and a state Supreme Court decision in August had cleared the way for it go forward, he said.

Final approval of the Arizona settlement is set for Dec. 10, Goodwin said. Class members will have 120 days to claim their vouchers after the settlement is approved.