Microsoft settlement is rejected by Mass.

3 states are likely to join legal fight against antitrust deal


WASHINGTON - The 18 states involved in the Microsoft antitrust case appeared headed for a sharp split yesterday, with one group of attorneys general planning to sign on to the proposed settlement between the software giant and the Bush administration and another group preparing to challenge it, saying it leaves loopholes that would undermine provisions intended to promote competition.

After three days of intensive deliberations, only one state attorney general, Tom Reilly of Massachusetts, officially announced his position.

He said Massachusetts would seek to block the deal, concluding that it "may prove to be more harmful than helpful to competition and consumers."

Massachusetts became the first state to formally reject the proposed agreement and is expected to be joined by Connecticut, California and Wisconsin.

Lawyers from other states - including Maryland, Michigan, Ohio and Iowa - declined to comment, saying they would issue their decisions today.

Officials of Connecticut, California and other states spent the afternoon in a late-stage effort to persuade Microsoft and the Justice Department to reopen the proposed settlement to eliminate a variety of ambiguities and provisions that the states viewed as too lenient, lawyers involved in the negotiations said.

Jim Ryan, the Illinois attorney general, suggested that he would support the agreement. But the attorney general of New York, Eliot L. Spitzer, postponed a planned announcement of his endorsement after his efforts to strike a separate deal with Microsoft collapsed, the lawyers said.

The failure of the Justice Department to gain the endorsement of all 18 states calls into question the proposed consent decree and creates a situation that antitrust experts said is without legal precedent.

At the least, the disapproval by some states is likely to delay resolution of the case for months.

U.S. District Judge Colleen Kollar-Kotelly has instructed the parties to detail their positions at a hearing this morning in Washington.

The judge has suggested that she may conduct parallel proceedings to consider both the merits of the proposed consent decree and the objections raised by states.

Her original schedule suggested that she would not decide what to do before late spring at the earliest.

Career officials at the Justice Department who have spent years working on the antitrust suit were described yesterday by the lawyers involved in the case as feeling deeply dissatisfied and betrayed by the proposed consent decree, which was negotiated and approved by political appointees of President Bush.

Timothy Bresnahan, a Stanford University professor who was chief economist for the Justice Department's Antitrust Division in the Clinton administration, said, "This settlement amounts to the government taking a dive."

But Assistant Attorney General Charles A. James, the new head of the Antitrust Division and the person who led the Microsoft negotiations for the Bush administration, made clear Friday that the terms of the deal were no longer negotiable.

By early yesterday evening, he appeared not to have changed his view that this was the best settlement the government could obtain.

The strongest criticism yesterday came from Reilly of Massachusetts.

"There's no question in my mind that Microsoft will use this agreement to crush competition," he said, "and they would have the imprimatur of the U.S. government to do it."

He said the Justice Department's news release describing the agreement as a substantial victory for consumers and competition "is not reflected by this agreement."

"They may think they nailed this down, but they didn't," Reilly said.

He said the states' study of the proposed settlement found flaws that made his decision to oppose it "a no-brainer," particularly in light of "Microsoft's repeated history of violating court orders and rules."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.