- The Washington Times - Wednesday, September 27, 2000

The Supreme Court yesterday rebuffed an extraordinary Justice Department plea that it uphold the order breaking up Microsoft's computer empire and act quickly because of its "immense importance to our national economy."
The high court voted 8-1 not to hear appeals from U.S. District Judge Thomas Penfield Jackson's antitrust ruling until they are reviewed by the Court of Appeals for the District of Columbia Circuit, which served notice June 13 that it wanted to hear the case.
The action means no final action is likely until mid-2002 at the earliest, and more likely 2003. The Justice Department had wanted the nation's highest court to hear arguments this winter and issue a ruling in the spring.
"This is a serious setback for the government," said William Kovacic, a George Washington University law professor and antitrust analyst. "Their strategy was to speed this case to resolution as quickly as possible… . I think the government gambled and failed. At this point, I think the possibility of breakup is next to zero."
Microsoft Chief Executive Officer Steve Ballmer predicted vindication and said he did not want delays.
"We're interested in speedy resolutions. We want to get this thing moving as quickly as possible. We want to be able to be vindicated and move on," said Mr. Ballmer, who called his victory "just another procedural step" but one that delighted Microsoft.
After the high court action, the Circuit Court immediately ordered both sides to propose a briefing schedule, with Microsoft's proposal due by Monday and the government response by Oct. 6. The court has said all seven judges who did not opt out of the case because of conflicts will sit as a group, instead of assigning it to a three-judge panel as is customary.
No matter how close the ultimate appeals court decision, or which way it goes, its judges would be expected to provide the Supreme Court a reasoned critique that would help the justices decide the issues.
Justice Department spokeswoman Gina Talamona said, "We look forward to presenting our case to the Court of Appeals as expeditiously as possible."
After the ruling, Microsoft's stock rose $2.75 to $64 in heavy afternoon trading on the Nasdaq exchange, then closed at $62.69 a share for a $1.44 gain on the day.
There was immediate speculation the decision would open the government to resuming settlement talks, after rejecting a company proposal in March. Those talks were conducted under the auspices of Chief Circuit Judge Richard A. Posner of the 6th Circuit in Chicago, who said the split was hopeless.
Justice Department antitrust chief Joel I. Klein has said the government remains ready to resume settlement talks if Microsoft is willing to address what he called fundamental issues in the case. Mr. Klein leaves the government Friday but his deputy, A. Douglas Melamed, is not expected to alter the government's approach.
Refusal of Solicitor General Seth Waxman's request to skip that step under the Expediting Act virtually forestalls any chance that Microsoft could be sundered into two operating entities for years, even if the appeals court and Supreme Court eventually agree with Judge Jackson's sweeping decision.
"If this case does not qualify for direct review under the Expediting Act, it is difficult to imagine what future case would," the Clinton administration said when it invoked the law for only the third time in 26 years.
Agreeing with that was the lone dissenter, Justice Stephen G. Breyer, who said appeals court review would help focus issues, but delay may impede economic growth among the fast-changing high-tech industries that lead the current prosperity.
"I believe this court can consider the issues fully now by taking additional briefs and by granting additional time for oral argument, if necessary. Consequently, I would hear the appeal," Justice Breyer wrote. "Speed in reaching a final decision may help create legal certainty."
His brief note seconded the view of most industry analysts that computer technology changes so quickly that the Windows operating system will be passe by the time any final order could take effect. The Justice Department expressed concern that delay would only give Microsoft time to further consolidate its position in the industry.
Judge Jackson's order would set up Windows as a company separate from other Microsoft operations, such as the Office suite and Internet browser software, much as another D.C. judge once broke up American Telephone & Telegraph Co. into regional "Baby Bell" companies. He ruled the company used its monopoly of personal computer operating systems to compete illegally.
Microsoft's appeal called Judge Jackson's order "radical and unwarranted" and said he made many errors. The company also asked that Judge Jackson be disqualified from hearing any further matters in the case because of comments about the case to the news media, particularly an interview with The Washington Post within hours of his ruling.
There was no signed opinion yesterday explaining the majority refusal, except Chief Justice William H. Rehnquist's explanation of why he decided to sit in judgment on the Microsoft cases while his son, James C. Rehnquist, represents the company in a private antitrust case that could be affected by the high court ruling.
"I think that an objective observer … would not conclude that my participation in the pending Microsoft matters gives rise to an appearance of partiality," the chief justice said.
The high court directed Clerk William Suter "to issue the judgment forthwith" without the usual waiting period before sending out the mandate.
George Priest, who teaches antitrust law at Yale Law School and consults for Microsoft, said he expects a close decision at the appeals court.
"I think it's extremely important to have two sides and two opinions," Mr. Priest said, suggesting that even if the violations are upheld Judge Jackson might be ordered to hold a full hearing and reconsider his decision to break up the company.
That view was supported by James Rill of Howrey, Simon, who headed the antitrust division under President Bush.
"The Appeals Court is going to have to take a close look at the record in determining whether, if it affirms the violations, the remedies are appropriate," he said.

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