- The Washington Times - Friday, November 8, 2002


The Justice Department won't enforce on Microsoft Corp. restrictions that nine states won from a federal judge in addition to those included in a settlement of the government's antitrust case, a U.S. official said yesterday.

The nine states, led by California, Connecticut and Iowa, will police Microsoft's compliance with limitations that they persuaded U.S. District Judge Colleen Kollar-Kotelly to impose, said the Justice Department's chief antitrust enforcer.

The judge imposed the additional restrictions on the world's biggest software maker last week, when she also approved Microsoft's settlement with the Bush administration.

"It's up to the state attorneys general to enforce that," Charles James told reporters after a speech to the American Bar Association's antitrust section.

Mr. James, who is leaving the Justice Department Nov. 22 to become general counsel of ChevronTexaco Corp., took some parting shots at critics who say the settlement won't restore competition in the industry. He said the Microsoft case revived questions about the participation of states in nationwide antitrust cases.

The states' role "is more a product of historical accident than a conscious effort to make antitrust enforcement effective in today's national and global marketplaces," Mr. James said in his speech. "This is not the system we would design today if we were starting all over again."

Much of the criticism over the settlement he negotiated in the 4-year-old case came "from Microsoft's competitors, because there wasn't enough gravy in the settlement," Mr. James said.

Microsoft shares, which have increased 5.8 percent since the settlement was approved, dropped 94 cents to close at $56.09 on the Nasdaq Stock Market.

The settlement requires Microsoft to give personal-computer makers freedom to promote rival software products on personal computers powered by the Windows operating system.

Judge Kollar-Kotelly also barred Microsoft from retaliating against PC makers that opt to hide its programs, such as Internet Explorer or the Windows Media Player, and promote competing programs, such as the RealOne player made by RealNetworks Inc.

The Justice Department, which will enforce the settlement, lacks legal authority to police any of the extra provisions the judge granted the holdout states, Mr. James said. There shouldn't be much "friction" between separate federal and state enforcement efforts because "the ultimate state decree is enough like ours," he said.

"What a narrow view to take," said Eleanor Fox, who teaches antitrust at New York University law school. "If I were a state enforcer, I would be pretty mad."

Even without technical authority to enforce the restrictions won by the states, Mr. James or his successor "certainly has the authority to have that on his checklist and do surveillance and let Microsoft know when the Justice Department thinks they are falling short of that obligation."

Iowa Attorney General Tom Miller, a leader of the holdout states, declined to comment on Mr. James' remarks, said spokesman Bob Brammer. Microsoft spokesman Jim Desler said the company did not have an immediate comment.

Microsoft and the Justice Department negotiated their settlement last year after an appeals court held the software maker illegally protected its operating-software monopoly. The nine states that refused to sign the settlement sought tougher remedies, which were mostly rejected by the judge. Nine other states, led by New York, Wisconsin and Pennsylvania, joined the settlement.

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