Microsoft, DOJ Fail to Settle

By Peter Galli  |  Posted 2001-10-12

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.

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