June 28, 2001 3:15 PM PDT
FAQ: What the appeals court's ruling means
How did the case start?
The Justice Department and 19 states filed antitrust charges against Microsoft in May 1998. After 76 days of trial and some later proceedings, U.S. District Judge Thomas Penfield Jackson in April 2000 ruled that Microsoft violated two sections of the 1890 Sherman Act.
About two months later, he issued a remedy that ordered Microsoft be broken in two and restricted the company's business conduct. He later stayed both orders pending appeal.
Who filed the appeal?
Microsoft. With a sweeping victory in hand, the government had no reason to appeal the judge's ruling and remedy.
Who were the judges responsible for the decision?
In an unprecedented move, the U.S. Court of Appeals for the District of Columbia Circuit heard the case before a full panel of eligible judges. Typically, only three jurists hear an appeal.
Four of the seven jurists were appointed by Republican Presidents Ronald Reagan or George Bush: Douglas Ginsburg, Raymond Randolph, David Sentelle and Stephen Williams. Democrats Jimmy Carter and Bill Clinton appointed the remaining judges: Harry Edwards, Judith Rogers and David Tatel.
What did the judges have to decide?
The appeal tackled four major issues and several secondary issues. The most important question was whether Microsoft used anti-competitive tactics--such as threatening to withhold Windows from PC makers or forcing them to agree to exclusive contracts that shut out Netscape--to illegally maintain a monopoly on Intel-based operating systems.
The court also addressed Microsoft's contention that Jackson mishandled the remedy portion of the case.
What did the judges rule?
The judges affirmed most of the monopoly maintenance claim but reversed on attempted monopolization. The court sent the tying claim, as well as the breakup remedy, back to the district court for re-review.
Is being a monopoly illegal?
No. Any company can have a monopoly, but U.S. law prohibits using that power to hamper competition. If, for example, a monopoly company withholds its dominant product because a customer also wants to sell a competing product, that could be construed as unfair competition.
What happens to Microsoft now?
For the time being, nothing. Microsoft can conduct its business as usual while the case remains in the courts.
What happens next?
Several steps will follow, starting with the remedy portion returning to the trial court but reassigned to a different judge. As expected, the appeals court removed Jackson from further handling of the case. At the same time, any of the parties--the Justice Department, the 19 states or Microsoft--could appeal the case to the Supreme Court. With the appeals court upholding the most important part of the case, only Microsoft is likely to appeal at this juncture.
The next step is up to the government, which must tell the court what it wants to do next--most likely set up a schedule for future proceedings.
Could the government drop the case?
Yes. Either the Justice Department or the 19 states could drop the case. But the states have publicly stated that they will take it to the Supreme Court, if necessary. As for the DOJ, the Justice Department has never dropped an antitrust case it won at the trial level.
What about a negotiated settlement?
Many legal experts believe a Bush White House and a Justice Department under Attorney General John Ashcroft would rather settle than pursue the case all the way to the Supreme Court. But the government may be divided on this point, as several states have insisted that any settlement short of breaking up Microsoft is inadequate.
What happens if the states pursue the case on their own?
Many legal experts believe that the Supreme Court would reject the appeal, particularly because the Justice Department could object to such action after a settlement.
Does the Supreme Court have to accept any normal appeal brought by Microsoft or the Justice Department and states?
No. The Supreme Court rejected an earlier opportunity to hear the appeal, instead giving the appellate court first crack at the case. Many legal experts expect the high court to accept an appeal because of the case's importance.
When will the case end?
That largely depends on what the parties do next. If all sides agree on a settlement, the case could be over this year. If any side appeals, the Supreme Court would likely decide to accept or reject the case by October. If the Supreme Court does accept an appeal, a decision could be handed down in June 2002, and that would end the case.
More likely, when the court returns from summer recess after Labor Day, the proceedings on the remedy and tying claims will be scheduled.