Uphold Microsoft split order, say US states, Justice Dept.

Tim Dobbyn

WASHINGTON: The Justice Department and states that brought the Microsoft

Corp. antitrust case urged an appeals court on Friday to uphold findings that

the software powerhouse broke the law and should be split in two to prevent

future violations.

In a filing with the US Court of Appeals, the government said the Microsoft

matter was "a classic case of monopolization" in which market

dominance was used to sustain or extend that power.

"The district court acted properly in imposing the structural and

conduct remedy for Microsoft's wide-ranging course of illegal actions,"

said part of the 150-page brief.

District Judge Thomas Penfield Jackson last June found that Microsoft holds

monopoly power in the market for personal computer operating systems with its

Windows product and illegally used that power to crush competitors, including

Web-browser rival Netscape.

On June 7, Jackson ordered that the company be broken up to prevent future

antitrust violations and set other remedies, all of which he suspended pending

appeal.

Microsoft told the appeals court in November that the trial court proceeding

was "infected with error" and described the breakup order as

"radical relief".

But the government said the breakup and various conduct remedies were

designed to end unlawful conduct and prevent its recurrence.

"The structural relief wisely relies on ordinary market incentives,

rather than long-term judicial oversight...," the filing said.

The government had wanted the Supreme Court to directly hear the company's

appeal, but the high court sided with Microsoft and sent the case to the lower

appellate court, which ruled for the company in a related case in 1998.

Microsoft has drawn the appeals court's attention to Judge Jackson's many

comments on the case both during and after the trial as sufficient grounds to

vacate the judgment.

Jackson may also have offended the judges on the appeals court with remarks

about his 1998 reversal quoted in a recently released book about the trial by

New Yorker magazine writer Ken Auletta.

"...(T)hey went ahead and made up about 90 per cent of the facts on

their own," Jackson is quoted as telling Auletta.

But the Department of Justice, 19 states and the District of Columbia that

brought the case said Microsoft could not establish any prejudice from the

out-of-court statements.

"Those statements provide no grounds for inferring bias or partiality,

nor establish a basis for setting aside the judgment or removing him from

subsequent proceedings," they said.

Friday's filing could be the final word for senior Justice Department

antitrust officials, who will likely be replaced by the incoming Republican

administration of President-elect George W Bush before oral arguments scheduled

to take place Feb. 26-27.

The states have said they are prepared to carry the case forward on their

own, to the Supreme Court if necessary, should the Bush administration try to

back away.

In other development in the case Friday, an industry trade group representing

rivals of Microsoft said it had hired former Whitewater prosecutor Kenneth Starr

to help support the government.

Starr, whose credentials include a stint on the US Court of Appeals that is

hearing the case, has been engaged by Procomp, an organization that includes AOL

Time Warner, Sun Microsystems Inc. and Oracle Corp.

Starr, who continued a probe into President Clinton's investment in a failed

Arkansas land deal called Whitewater, is best known for his dogged pursuit of

Clinton's affair with White House intern Monica Lewinsky. He stepped down as

Whitewater prosecutor in 1999.

(C) Reuters Limited 2001.