February 28, 2002 4:05 PM PST

Microsoft foes can testify at hearing

A federal judge will let outsiders, including Microsoft competitors, make presentations at next week's hearing to determine whether the landmark antitrust settlement is in the public interest.

Microsoft and the Justice Department earlier had requested that no third parties be allowed to participate in the hearing, particularly since third parties had already filed comments about the proposed settlement. The March 6 hearing will address whether the revised settlement filed Wednesday is in the public interest as mandated by the Nixon-era Tunney Act.

U.S. District Judge Colleen Kollar-Kotelly issued a flood of orders Thursday giving a number of trade groups, Microsoft competitors and other parties permission to participate in the Tunney Act process, but she limited the majority to 10-minute presentations before the court.

SBC Communications and trade groups the American Antitrust Institute (AAI), the Computer & Communications Industry Association (CCIA), the Computing Technology Industry Association (CompTIA), ProComp and the Software and Information Industry Association (SIIA) are among those petitioners being allowed to make limited presentations.

AAI receives funds from Microsoft competitor Oracle, while ProComp is backed in part by AOL Time Warner, Oracle and Sun Microsystems. Microsoft withdrew its membership from SIIA in March 2000 over differences about the antitrust case.

In separate memorandums accompanying some of the orders allowing the limited participation in the Tunney Act process, Kollar-Kotelly laid out some of her reasons for rejecting requests to file additional legal briefs or submit other evidence.

In the case of ProComp, she noted that the trade group and members AOL and Sun had all filed comments with the Justice Department about the settlement proposal. "The Court considers any additional participation by ProComp to be largely superfluous," Kollar-Kotelly said.

She emphasized, "Given that ProComp appears to represent a vocal group of Microsoft's staunchest competitors, it is quite clear that whatever interest ProComp may have, it is unlikely that Microsoft represents that interest."

The litigating states also will participate in the Tunney Act proceeding but in a larger role, as they present information related to the deposition testimony of Microsoft Senior Vice President Richard Fade. The states contend that Microsoft is using uniform licensing changes mandated by the settlement to charge some PC makers more money and pilfer some of their intellectual property rights.

Microsoft and the Justice Department attempted to address the intellectual property rights issue in their changes to the settlement, but the litigating states scoffed at the tweak.

"Microsoft has used the settlement as a sword to extract intellectual property rights they weren't able to secure from other companies prior to the settlement," said Tom Miller, Iowa attorney general and one of the leaders of the litigating states. "Once that was revealed, Microsoft said it would stop the practice and has now agreed to remove the provision."

The uniform licensing provision, which would prevent sweetheart deals for buying Windows, was something both federal and state trustbusters had originally wanted from Microsoft.

While participating in the Tunney Act proceeding, the litigating states will be preparing for a separate March 11 hearing on stiffer sanctions against Microsoft. Nine states and the District of Columbia rejected the deal cut in early November by Microsoft, the Justice Department and nine other states. The settlement largely restricts Microsoft's business practices, but the litigating states also want limits on how the software giant develops and releases software.

see special coverage: Microsoft, DOJ reach settlement Kollar-Kotelly also denied a request that lawyers representing California class-action lawsuits against Microsoft be allowed to participate in the Tunney Act process. They raised concerns that the settlement could extinguish their right to sue Microsoft for damages stemming from the company's anti-competitive acts.

More than 100 private cases--most alleging that Microsoft overcharged consumers as much as $40 per copy of Windows--are pending against the company. In January, a federal judge tossed out a $1 billion settlement in the private cases, siding with critics who called the deal anti-competitive.

AOL subsidiary Netscape and one-time Microsoft competitor Be also have filed lawsuits against the software titan.

The Justice Department and Microsoft had asked Kollar-Kotelly to restrict the hearing to the settling parties, but offered, as a concession, limited participation by a few outsiders.

"Earlier this month, we said that third-party participation was unwarranted and unnecessary given that they could file comments during the public comment period," said Microsoft spokesman Jim Desler. "We said that if the court decided there would be participation that that participation be limited to a small, manageable number of parties and limited to brief oral arguments, and that the greatest portion of the hearing be allocated to Microsoft, to the Department of Justice and to the settling states."

Next week's Tunney Act hearing could bring to a close one portion of the nearly 4-year-old Microsoft antitrust trial. Kollar-Kotelly must determine whether the proposed deal is in fact in the public interest to approve it. The Justice Department received about 30,000 comments on the settlement, with the majority of the 47 most substantial submissions opposing the settlement.

The Justice Department on Thursday revealed that recount of the comments found 12,500 against the settlement, 10,000 for and 9,500 expressing no opinion either way. Earlier, federal trustbusters had indicated that respondents had opposed the deal by a 2-to-1 margin.

 

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