District Court Approves Settlement Between Microsoft and Federal Government

In approving a proposed settlement of the antitrust action brought by the U.S. Department of Justice against Microsoft Corp., Judge Kollar-Kotelly of the U.S. District Court for the District of Columbia issued two opinions. In the first, she determined the proposed settlement generally comported with the Tunney Act, which requires that courts subject any consent decree proposed in civil antitrust suits brought by the federal government to a "public interest" analysis.

In the second, the court analyzed the settlement, as well as an alternate plan put forth by nine state attorneys general who were not satisfied with the federal government's proposed settlement, and sought to impose stricter remedies against Microsoft. The judge rejected the proposed harsher remedies, finding that the government's proposal was tailored to address the practices that were actually found to have violated the Sherman Act. United States et al. v. Microsoft Corp., Case Nos. 98-1232 and 98-1233 (D.C.D.C. Nov. 1, 2002).

The U.S. government and 18 state attorneys general sued Microsoft in 1998, accusing the company of unlawfully maintaining its PC operating system monopoly by destroying the potential threat posed by "middleware," such as the combination of the Netscape Navigator Web browser and Sun Microsystems Java programming language: The middleware could potentially replace the traditionally operating system as the central feature of a PC. The government alleged Microsoft used a variety of anti-competitive tactics to block such middleware in order to ensure its own dominance in the marketplace.

The district court held a full trial, and its findings were subject to appellate review by the U.S. Court of Appeals for the District of Columbia Circuit. The court of appeals affirmed the district court (Judge Thomas Penfield Jackson), finding that Microsoft had engaged in anti-competitive conduct to maintain a monopoly in the market for PC operating systems in violation of Section 2 of the Sherman Act, but reversed the district court's finding that Microsoft violated the act by attempting to monopolize the market for internet browsers. On this last point, the appellate court threw out the claim completely, finding that a remand would be pointless.

The court of appeals also vacated the district court's remedy: an order to break Microsoft into two companies, one to handle the Windows operating system and another to develop and sell applications programs. The case was...