Tags: Justice | Department | Ends | Bid | Split | Microsoft

Justice Department Ends Bid to Split Microsoft

Thursday, 06 September 2001 12:00 AM

The department also said it would not pursue allegations that tying in the company's Internet browser to Windows source code violated antitrust law.

In a statement, the department said it was making its latest move "in an effort to obtain prompt, effective and certain relief for consumers."

There was no immediate word on whether the Justice Department action was aimed at facilitating a settlement of the massive antitrust case.

Microsoft reacted cautiously to the announcement. "We remain committed to resolving the remaining issues in the case," spokesman Vivek Varma said.

The Justice Department did, however, indicate it would seek penalties first suggested by a judge earlier in the case that could affect or delay the company's Windows XP operating system, due for release Oct. 25, Fox News reported.

That news hurt Microsoft's stock, which fell $1.72, or almost 3 percent, to $56.02.

The department's announcement does not mean that the judge hearing the remainder of the Microsoft case cannot order that the software giant be broken up, but it makes such an action highly unlikely.

``The change to a more pro-business Bush administration made a breakup unlikely,'' said Brendan Barnicle, an analyst at Pacific Crest Securities. ``The reality of a settlement becomes more likely without the threat of a breakup hanging over the company's head.''

Earlier this summer, a federal appeals court threw out a judge's order snapping the company in two. The appeals court said anti-Microsoft comments made by U.S. District Judge Thomas Penfield Jackson had so "tainted" the case that his proposed "solution" to the company's anti-competitive conduct had to be reversed.

After a lengthy trial in 2000, Jackson ordered Microsoft to spin off its popular Windows operating system from the rest of the company, but stayed his order pending appeals.

Although it upheld much of Jackson's ruling, saying that Microsoft had violated U.S. antitrust law, the appeals court also sent the case back to U.S. District Court for further proceedings before another judge. The appeals court said the proceedings should determine whether Microsoft violated the law by "bundling" its Internet Explorer browser into the code of the Windows operating system.

The Justice Department announcement Thursday means that the government will not pursue that allegation in the case, which is now being heard by U.S. District Judge Colleen Kollar-Kotelly.

"Today's announcements were made in light of an order by [Kollar-Kotelly] directing the Antitrust Division and Microsoft to produce a joint status report by Sept. 14 … outlining proposals for further proceedings in the case," the Justice Department said. "The division advised Microsoft of its position on the tying claim and the issue of structural relief to facilitate consultations on the joint report."

The department announcement claimed victory on the "core allegation in the case."

"In view of the court of appeals' unanimous decision that Microsoft illegally maintained its monopoly over PC-based operating systems - the core allegation in the case - the department believes that it has established a basis for relief that would end Microsoft's unlawful conduct, prevent its recurrence and open the operating system market to competition," the department statement said. "Pursuing a liability determination on the tying claim would only prolong proceedings and delay the imposition of relief that would benefit consumers."

The case in the lower court, and the latest Justice Department position, for the moment do not affect Microsoft's petition before the Supreme Court. In that separate action filed after the appeals court ruling in June, Microsoft asked the justices to intervene before the proceedings in U.S. District Court are completed.

The company told the Supreme Court in a brief that because Jackson "tainted" the case, all of his rulings against the company should be thrown out and the case should be brought back to square one.

In its own brief to the Supreme Court, the Justice Department told the justices they should not intervene until the case plays itself out in the lower courts.

The Supreme Court should make a decision on the Microsoft request within the next month or so.

Copyright 2001 by United Press International.

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The department also said it would not pursue allegations that tying in the company's Internet browser to Windows source code violated antitrust law. In a statement, the department said it was making its latest move in an effort to obtain prompt, effective and certain...
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2001-00-06
Thursday, 06 September 2001 12:00 AM
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