Judge to get Microsoft agreement

But states may seek more time to pursue separate settlement

Four-year antitrust case

Pact announcement due today, deadline set for resolution

November 02, 2001|By Andrew Ratner and Stacey Hirsh | Andrew Ratner and Stacey Hirsh,SUN STAFF

Microsoft Corp. and the Justice Department have reached a proposed settlement in the government's antitrust case, but an attorney for the states that are opposing the software giant, including Maryland, is expected to ask for several more days to pursue their own conclusion to the case that began four years ago.

No parties involved would comment for the record last night, but several sources said a settlement offer would be announced this morning before U.S. District Judge Colleen Kollar-Kotelly. The judge had set a deadline of today for a settlement or planned to resume hearings in March to resolve a judgment that Microsoft sought to create an illegal monopoly in the personal computer industry.

Brendan V. Sullivan, a prominent trial attorney whom California hired last week on behalf of the states, will ask the judge for a few more days to reply to the agreement between the federal government and Microsoft, sources said.

The late entry of Sullivan was widely viewed as a sign that state attorneys general were dissatisfied with the Justice Department's negotiations.

Sullivan, a senior partner at the Williams & Connolly law firm in Washington, gained national fame during the late 1980s when he represented former White House aide Oliver North during the Iran-contra scandal.

California, Connecticut, Ohio, Wisconsin and Massachusetts were the states that argued most strongly for a delay, a source said.

A spokesman for Iowa Attorney General Tom Miller, a leader of the states' effort, declined comment last night.

The proposed settlement is said to involve Microsoft making the secret source code for its products available to competitors, among other remedies. It reportedly would place Microsoft under court supervision for the next five to seven years to ensure compliance.

Even before an announcement, Microsoft opponents, including consumer-advocate and public interest groups, were lining up against it.

"It is outrageous that the federal government, armed with a 7-0 decision by the U.S. Court of Appeals that Microsoft illegally quashed rival software makers, would decide to settle in this fashion," the Consumer Federation of America, Consumers Union and the Media Access Project said yesterday in a joint statement. "The potential for Microsoft to continue to misbehave under this reported arrangement is enormous."

Some analysts believe that the states would lack political support and financial means to take on the case, especially since the Sept. 11 attack on the United States has focused the nation on fighting terrorism and heightened fears about the economy.

"This is all getting settled now because of the economy, and the attorneys general who continue will be faced with voters who are not going to be happy with anything that continues to damage the economy," said D. Christopher Ohly, a Baltimore attorney who specializes in intellectual property law. "The political environment being what it is and Microsoft knowing well how to play the game, that will be part of its overall strategy."

Also, the federal government can be expected to file friend-of-the-court briefs on behalf of the software giant, and Microsoft's biggest opponent becomes its biggest supporter, said Norman Hawker, an associate professor at Western Michigan University's Hayworth College of Business.

Several states are likely to peel off and settle, leaving a smaller, core group to stay in the fight, some observers said. But Sullivan's entry underscores the states' aversion to the Bush administration's direction on the case, initiated in 1996 by the Clinton administration.

Sullivan's hiring "was a pretty clear sign that the states can choose to continue if that's what we believe the best course is," said Ellen Cooper, who heads the antitrust unit for the office of Maryland Attorney General J. Joseph Curran Jr.

"I think if they were actually to go on their own and take it to court, they'd get their heads handed to them," said James V. DeLong, a senior fellow at the Competitive Enterprise Institute, a Washington think tank that had been a Microsoft advocate. "These guys are politicians, not lawyers."

States, however, have successfully pursued significant cases against businesses before in the face of political opposition.

In the late 1980s, Maryland joined 18 states in a controversial lawsuit against the insurance industry. Attorneys general argued that insurers conspired in the United States and Britain to narrow coverage for state and local governments and businesses on risks that had become costly to cover.

In Maryland, then-Gov. William Donald Schaefer complained that Attorney General Curran's involvement would cast a negative light on the state's business climate. But Curran proceeded, arguing that the suit helped businesses that were paying inflated premiums. The states brought the case to the Supreme Court and concluded a settlement without involving the Justice Department.

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