Microsoft Seeks Dismissal of Stiffer Sanctions

Microsoft Corp. asked a federal judge Wednesday to throw out efforts by state antitrust enforcers to obtain stiffer sanctions against the company than it agreed to in a settlement deal with the Department of Justice.

In a detailed filing in federal district court, company attorneys argued that only the U.S. government can legally seek changes to Microsoft’s business practices that are national in scope.

Nine states and the District of Columbia, which did not sign onto the settlement, “seek to establish themselves as national antitrust policymakers, displacing the executive branch of the federal government,” Microsoft’s attorneys said. “This they cannot do.”

The states pursuing the case have labeled the settlement deal inadequate and riddled with loopholes. They have proposed alternate language for some provisions and new sanctions against the company, changes that Microsoft has said would cripple its business.

Iowa Atty. Gen. Tom Miller, who leads the state coalition of prosecutors in the case, vowed to fight the company’s latest move.

“The Microsoft position would undermine lawful, proper and practical enforcement of our country’s antitrust laws by the states and perhaps by private parties,” he said. “Our system depends on the strength of shared jurisdiction, and it is firmly based on a century of case law.”

But the Microsoft case has strayed into murky legal territory. “States have a right to ask a judge to change Microsoft’s business practices,” said Hillard Sterling, a Chicago antitrust attorney. “Microsoft’s argument is based on a strained and narrow interpretation of the federal antitrust statutes.”

What is less clear, other antitrust experts said, is whether sanctions proposed by states can supplant those put forth by the federal government.

Never before have some states in an antitrust case supported a federal deal while others decided to seek stricter restrictions.

But the case also is unprecedented because the settlement was reached after a federal appeals court upheld many counts of anti-competitive conduct by Microsoft, and ordered new hearings on what penalties should be imposed. Federal District Court Judge Colleen Kollar-Kotelly has scheduled hearings to begin March 11.

Microsoft and the government said Wednesday that they will make changes to their proposed antitrust settlement.

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Reuters was used in compiling this report.