Tuesday, November 6, 2001

Massachusetts yesterday became the first state to publicly oppose the Justice Department’s settlement agreement with Microsoft Corp.
The federal government agreed last week to settle the long-running antitrust suit against Microsoft in return for a broad range of restrictions on the company’s business practices.
But opposition to the settlement from Massachusetts makes it less likely the lawsuit will end today, when the states are due in court to tell U.S. District Judge Colleen Kollar-Kotelly whether they endorse the proposed settlement presented last week by the federal government.
Massachusetts Attorney General Thomas Reilly said that yesterday the settlement between Microsoft and the Justice Department has too many loopholes, and that he won’t endorse it unless there are significant changes made to the document.
“The original goals of the this suit were to restore competition and prevent a return of illegal and abusive conduct. This agreement is license for Microsoft to use its dominance and power to crush competition. We all lose if that happens,” Mr. Reilly said.
He said he and his staff spent the weekend analyzing the agreement before deciding to oppose the settlement, which he described as “fundamentally flawed.”
Some states are expected to back the deal, including Illinois Attorney General Jim Ryan, who is awaiting a review of the agreement by his staff.
New York Attorney General Eliot Spitzer was in negotiations yesterday with Microsoft on changes to the settlement and could sign it if the sides can agree on modifications, his staff said.
Iowa Attorney General Tom Miller, who headed the states’ legal effort, said last week following a court hearing that the settlement “represents some progress” in negotiations.
California Attorney General Bill Lockyer has been the only other state official to publicly criticize the Justice Department’s settlement.
The 18 states still embroiled in the antitrust, filed in May 1998, case asked Judge Kollar-Kotelly last Friday for time to read the Justice Department’s settlement with the Redmond, Wash., software developer.
Anything short of a unanimity could prolong the case. State attorneys general are free to seek tougher new restrictions independent of the Justice Department and independent of each other. The outcome of subsequent litigation wouldn’t affect the federal government’s negotiated resolution with Microsoft.
The states could also try to persuade Judge Kollar-Kotelly to strengthen the restrictions already negotiated by the Justice Department in hearings to determine whether the current agreement is in the public interest. Those hearings are required under the Tunney Act.
The Justice Department and Microsoft reached a settlement that imposes a broad range of restrictions on the company intended to stop its unlawful conduct, prevent recurrence of similar conduct in the future and restore competition in the software market.
The settlement gives computer manufacturers flexibility to contract with competing software developers and place their products on Microsoft’s operating system and prohibits Microsoft from retaliating against computer manufacturers, software developers and other companies that choose to develop or use competing software.
The restrictions would be in place at least five years, and a three-person technical committee would be charged with ensuring Microsoft abides by the terms of the agreement.

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