States To Pursue Microsoft On Own

U.S. state attorneys general say they are determined to pursue the Microsoft Corp. antitrust case even if a new Justice Department under incoming President Bush tries to back away.

Microsoft is appealing a trial court ruling that it abused monopoly power and should be split in two to prevent further antitrust violations. The U.S. Court of Appeals will hear oral arguments in February, after top posts at the Justice Department are replaced with Republican leadership.

A top economic advisor to Mr. Bush has criticized antitrust enforcement under President Clinton, but opposition to dropping the case from the states and some in Congress would make it difficult to reverse course.

"We hope and assume that the Bush administration would fully pursue the Microsoft case through all stages, including the Supreme Court, if that's necessary," said Iowa Attorney General Tom Miller, leader among the 19 states that are co-plaintiffs in the case with the federal government. "However, if for some reason they don't, we have made a commitment to pursue this case to the end."

The Clinton administration's last hurrah will be this Friday, when it files a 150-page brief with the appeals court in advance of the oral arguments on Feb. 27 and 28.

Until now, lawyer David Boies has argued the case for the Justice Department. He is unlikely to continue in that role. Boies argued for Al Gore before the U.S. Supreme Court and lost on a 5-4 decision that propelled Mr. Bush to the presidency.

Even before that, the Bush camp had few kind things to say about Justice Department antitrust policy.

President-elect Bush's recently appointed assistant for economic affairs, Lawrence Lindsey, said six months ago the Clinton antitrust policy was "radical" and needed change.

Lindsey said at the Republican Convention in August that a Bush administration would have "greater sensitivity" to "respecting the private sector and respecting the need for innovation and profitability long-term," specifically mentioning Microsoft.

The states have a new obligation in light of such remarks, one of the leading state attorney generals in the case said.

"I think the lead order has now shifted hands and the states have it," said Connecticut Attorney General Richard Blumenthal.

If the administration tries a new tack it may also face resistance on Capitol Hill.

Senate Judiciary Chairman Orrin Hatch, a Utah Republican, gave strong backing to the former assistant attorney general for antitrust, Joel Klein, when he decided to take the Microsoft case to trial.

The Judiciary Committee must approve Klein's permanent successor, and the administration is expected to consult with Hatch before proposing a name for him to review.

The administration could try to short-circuit matters by settling the case before the appeals court rules, but Bill Baer, an antitrust lawyer with Arnold & Porter, said that it was "unlikely that a Bush adminitration would pull down the appeals process."

Microsoft may find itself in a better negotiating position once the court rules. In 1998 the Court of Appeals ruled for Microsoft in a related Justice Department matter.

The appeals court may not entirely throw out the lower court ruling, but could dump the order to break it up.

"Given the Court of Appeals history, it is likely to be skeptical about accepting a breakup as the proper remedy," said Steve Sunshine of Shearman and Sterling.

If the court agrees that Microsoft violated the law, he said, "The question becomes what to do about it." That would likely be the time for settlement talks, but the states are concerned about the terms.

Iowa's Miller said there would have to be substantial change in the way Microsoft uses its monopoly in the marketplace for the states to sign off on a settlement.

"If there is something less than that, we are committed to pursue the litigation," said Miller.

Some analysts have speculated Microsoft might try to reach an agreement that would remove any remaining legal liability. But an expert says that won't happen.

"The parties have no power to vacate a court decision," said Andy Gavil, a professor of law at Howard University Law School. He said the government could ask the court to reverse the finding of liability as a condition of a settlement, "but it's pretty unimaginable."

Thomas Penfield Jackson, the trial judge, found in June that Microsoft illegally used monopoly power in the market for personal computer operating systems to exclude competitors, in effect placing an "oppressive thumb on the scale of competitive fortune."

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