Microsoft, DOJ Fail to Settle

By Peter Galli  |  Posted 2001-10-12 Print this article Print

Microsoft Corp. and the Department of Justice have failed to reach a negotiated settlement in the time-frame imposed by Washington District Court Judge Colleen Kollar-Kotelly, sources close to the antitrust case told eWeek on Friday.

Microsoft Corp. and the Department of Justice have failed to reach a negotiated settlement in the time-frame imposed by Washington District Court Judge Colleen Kollar-Kotelly, sources close to the antitrust case told eWeek on Friday. In an order posted two weeks ago, Kollar-Kotelly told both parties they had until October 12 to again try and settle the antitrust case by themselves and out-of-court. If that failed, she would then appoint a mediator.
"As contemplated by the District Courts September 28th order, Microsoft participated earlier today in a conference call with the Plaintiffs and Judge Kotelly on the status of the court ordered settlement talks," said Microsoft spokesman Jim Desler on Friday. "Microsoft will not have a comment on the specifics of the call or status of the on-going talks at this time."
No court order had been posted by the time this story was published. On Thursday Desler said the parties had been engaged in intensive settlement talks, which had been conducted in good faith. "If we have been unable to reach a settlement by tomorrow, the parties may inform the Judge that they have agreed on a mediator or, if not, the Judge could appoint one herself," he said. Another source familiar with the case said it was highly unlikely that the two parties would have been able to agree on a mediator, given their vastly different positions on the outstanding issues in the case. So Kollar-Kotelly will in all likelihood have to appoint the mediator herself, the source said. She could also give the two parties more time to continue settlement talks themselves if they indicated a settlement could be reached in the near future, he said. Neither Microsoft nor the government are keen for the matter to go before a mediator. Kollar-Kotelly has herself made this clear, but wants the matter settled as quickly as possible. Previously she instructed the parties that if, by today, they had not been fully successful with their settlement talks that theyd be responsible for submitting by Oct. 12, an "agreed-upon individual to act as facilitator/mediator." If they fail to do so, the Court would appoint one, she said. Microsofts Desler declined to say if the name of any possible mediator had been given at Fridays discussions between the Judge and the others. In November 1999 District Court Judge Thomas Penfield Jackson, who was hearing the case, proposed a process mediated by Seventh Circuit Court of Appeals Chief Judge Richard Posner. The process was unsuccessful and, in April 2000, Posner announced that he had "endeavored to find common ground that might enable the parties to settle their differences without further litigation. Unfortunately, the quest has proved fruitless. "After more than four months, it is apparent that the disagreements among the parties concerning the likely course, outcome, and consequences of continued litigation, as well as the implications and ramifications of alternative terms of settlement, are too deep-seated to be bridged," he wrote. Dana Hayter, an antitrust expert at Fenwick & West LLP in San Francisco and a former attorney with the Justice Department who worked on the Microsoft antitrust case at that time, said he was skeptical mediation would be effective. "I think it is unlikely that she will get the parties to settle or that mediation will effectively resolve the issues in the case," he said. "Given how far apart the camps were on every substantive issue in the joint status report filed recently, I believe the remedy phase will ultimately have to be tried." But the parties, with or without a mediator, still have until November 2, 2001 to settle the matter. Failing that, remedy hearings would start, with briefs due in December and the hearing to start March 11, 2002.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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