Microsoft says it would `welcome' talks

Deal with U.S. now would speed benefits to consumer, some say

June 10, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Steve Ballmer, Microsoft Corp.'s chief executive officer, said yesterday the embattled company would welcome new discussions with the Justice Department to settle its antitrust case even as it appeals a judge's order to split it in two.

"We would still love that opportunity. We would welcome that kind of opportunity, but it would be inappropriate for me to speculate on that here," Ballmer told a news conference during a European business summit.

Ballmer's comments followed a statement a day earlier by Joel Klein, head of the U.S. Justice Department's antitrust division, that he was "prepared to engage in meaningful settlement negotiations" with Microsoft.

Earlier settlement talks failed, but with U.S. District Judge Thomas Penfield Jackson's order Wednesday that the software giant be broken up, it would seem Klein and his army of lawyers would be in the driver's seat in any new round.

Antitrust experts are split over whether Jackson's ruling gives the Justice Department a clear advantage should the warring parties return to settlement discussions.

What legal experts do agree on is that the Justice Department would prefer a deal now rather than wait the expected three to five years it could take for the case to make its way through the appeals process.

The reason: A deal now might keep Microsoft from attempts to monopolize new markets in the computer and Internet fields, such as the booming market for providing software services over the Internet to businesses. Ostensibly, say experts, a deal would result in speedier remedies in the marketplace than the courts could impose, said legal scholars.

"I think what Klein is saying to his lawyers is, `We are going to win this. The question is when?' " said Glenn B. Manishin, a former Justice Department lawyer who helped oversee the breakup of AT & T in the 1980s.

"They may be willing to strike a deal short of divestiture in the interest of getting some benefits to the consumer quickly," he said.

But Microsoft also made it clear it would pursue its appeal, with company spokesman Jim Cullinin characterizing Klein's statements as "nothing but posturing by the government."

"They are not interested in fair and reasonable discussions," said Cullinin. "We're confident of our case on appeal."

Microsoft, based in Redmond, Wash., has insisted throughout the two-year antitrust trial that it does not maintain a monopoly and has done nothing illegal. Thursday, the company asked that Jackson's decree be set aside until its appeal is heard.

Antitrust lawyers said yesterday that both sides were posturing in an effort to better their position.

"Microsoft's position at the bargaining table might actually improve as the case moves forward in the courts. They gain some leverage with the uncertainty of what will happen in the appellate courts," said Lars H. Liebeler, a Washington, D.C., antitrust lawyer who advises the Computing Technology Industry Association.

Manishin believes Jackson's ruling gives Justice a sharp advantage in any settlement discussions, though he agrees Klein is probably eager for a deal to avoid the potentially lengthy appeals process.

"I don't think Microsoft has any leverage. They are just posturing for confidence," said Manishin, now with Patton Boggs, LLP in McClean, Va. "Justice is clearly in the driver's seat."

He believes Klein can use the leverage of the impending breakup to get Microsoft to agree to remedies that constrain the company from dominating other computer and Internet-related markets, such as the server and application service provider markets, in the same fashion it came to monopolize the Internet browser arena.

University of Baltimore Law School Professor Robert H. Lande, who has followed the Microsoft case closely, said that while Jackson's ruling gives Justice an edge in discussions, neither Microsoft nor Justice appears interested in giving up much in new talks.

"The [previously] imposed mediation by Jackson was the time to settle," said Lande. "Even if the Justice Department were to settle its antitrust suit with Microsoft, Jackson's ruling provides fuel for other lawsuits," unless it's overturned on appeal, he noted.

"I don't believe for a second they'll settle this case," said Lande.

Wire services contributed to this article.

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