Justice Dept. Will Stay Out of States’ Microsoft Appeal

The Bush administration won’t weigh in on the appeal by two states seeking tougher restrictions on Microsoft Corp. than the world’s largest software maker negotiated to settle the government’s landmark antitrust case.

West Virginia and Massachusetts are appealing the refusal of a trial judge to impose more restrictions on Microsoft’s conduct than the company accepted in a settlement with the Justice Department and nine other states.

After stating in February that it might file a brief, the U.S. Justice Department notified the U.S. Court of Appeals for the District of Columbia Circuit that it wouldn’t offer arguments. The department said Wednesday in a letter to the court that it had decided after reviewing the states’ brief not to participate in the case, scheduled for argument Nov. 4 before seven appellate judges.

By staying out of the case, the Bush administration helps West Virginia and Massachusetts because it is “leaving the defense of the settlement to Microsoft,” said Andrew Gavil, who teaches antitrust law at Howard University in Washington. “Microsoft simply doesn’t have the same stature and credibility as would” the Justice Department in defending the settlement.

The Bush administration negotiated the settlement in 2001 after the appeals court held that Microsoft had illegally protected its Windows monopoly for personal computer operating software.

The agreement requires Microsoft to give computer makers freedom to promote software that competes with products such as the Internet Explorer Web browser and Windows Media Player for downloading video and audio programming.

Nine states, led by New York, Pennsylvania and Wisconsin, joined the Justice Department in signing the settlement, which was approved in November by U.S. District Judge Colleen Kollar-Kotelly in the District of Columbia. Nine other states, led by California, Connecticut and Iowa, sought additional remedies.

Kollar-Kotelly held 32 days of hearings on proposals by the dissenting states. These included a plan to force Microsoft to make a version of the Windows operating system from which Internet Explorer and Media Player could be easily removed by computer makers.

She rejected most of the proposals while ordering Microsoft to disclose a wider range of software codes to competitors than the company had agreed to in the settlement.

West Virginia and Massachusetts appealed Kollar-Kotelly’s rulings after the other seven hold-out states abandoned the fight and accepted the settlement. The case is now before the appeals court.

In their brief, the two states said Kollar-Kotelly accepted the settlement without citing evidence “how its remedial provisions will effectuate any meaningful change in the marketplace.” The settlement “will not restore competition, deny Microsoft the fruits of its illegal conduct” or “fulfill even the most basic mission of stopping all the practices” found illegal, the states said.

Shares of Microsoft, based in Redmond, Wash., rose 6 cents to close Friday at $24.22 on Nasdaq.