The U.S. Court of Appeals for the District of Columbia denied the Commonwealth of Massachusetts appeal for more stringent antitrust sanctions against Microsoft Corp. The ruling brings to a close a longstanding case brought by the Department of Justice against the company.
“This decision is bad news for consumers, bad news for competition and ultimately will be bad news for our economy,” said Massachusetts Attorney General Tom Reilly. “This clearly shows that our antitrust laws are not effective in protecting consumers. Our high tech economy will not reach its full potential unless regulators and the courts are willing to deal with Microsoft and its predatory practices.”
The Wednesday ruling culminates an action that began in 1998 when the U.S. government filed a complaint against Microsoft for violating antitrust laws. Microsoft was found to have illegally sustained a monopoly in the desktop operating system market. After the initial remedy order was struck down, the court ordered the parties to negotiate a settlement in September, 2001, which they did in November.
Several states challenged the remedies settlement in the district court, and hearings ran for 3 months in the spring of 2002. The court upheld the settlement, and eventually all states but Massachusetts consented to it.
“This is a resounding victory for the Justice Department and American consumers. The Court addressed the merits of every argument raised against the Departments remedy by two industry groups and the sole remaining state plaintiff (Massachusetts), and it clearly and thoroughly rejected all of them. The Courts forceful decision confirms what the Department has been saying all along—our settlement protects the public by providing a full and effective remedy for Microsofts anticompetitive conduct,” said R. Hewitt Pate, assistant attorney general of the DOJs antitrust division, in a prepared statement. “The Divisions attorneys and economists will continue to monitor closely Microsofts compliance with the settlement,” Pate concluded.
“What the challengers missed is that there is a big difference between creating an environment for competition and creating competition,” said Jonathan Zuck, president of the pro-Microsoft trade group, Association for Competitive Technology. “The consent decree correctly aims to create an environment where competition can thrive.”
The appeals court also denied the requests of the Computer and Communications Industry association and the Software and Information Industry Association to vacate the remedy order as not in the public interest.
“Of all the steps weve taken over the past two years, this is the most important step in resolving our legal issues and moving forward. Todays unanimous decision sends a clear and emphatic message that the settlement reached two years ago is a fair and appropriate resolution of these issues,” said Brad Smith, senior vice president and general counsel at Microsoft.
However, the antitrust charges against Microsoft continue in the European Union. Microsoft in March was levied a record fine of about $613 million for abusing its dominant market position with Windows. In addition, the company was ordered to produce a version of Windows without Windows Media Player.
Microsoft appealed the verdict and pointed to the U.S. settlement. Earlier this month, European Competition Commissioner Mario Monti described the E.U. consultation process as wider than that of the U.S. Department of Justice, and Europe as “more united than the United States” over the issue.
Editors Note: This story was updated to include information and comments from DOJ and Microsoft officials.