Friday, February 01, 2008

Microsoft Antitrust Final Judgments Extended to November 2009

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Washington, D.C. has extended until November 12, 2009 the terms of the antitrust final judgments against Microsoft Corporation that had been set to expire in large part in November 2007.

Ten states and the District of Columbia (a majority of the states who were parties to the decree) sought to extend all of the provisions of the final judgments until November 12, 2012, five years beyond their original expiration date.

Microsoft opposed the states’ efforts, arguing that the states had not met their burden for modification of the decrees. The U.S. Department of Justice supported the computer software maker’s position in a friend-of-the-court brief.

The decrees (2006-2 Trade Cases ¶75,418, 2006-2 Trade Cases ¶75,541) prohibit the computer software company from abusing its monopoly in the PC operating system market.

Changed Circumstances

The court concluded that modification was necessary because of a change in circumstances, basing its decision on the extreme and unforeseen delay in the availability of complete technical documentation relating to the “Communications Protocols” that Microsoft was required to make available to licensees under Section III.E of the final judgments. The court explained that the mandatory disclosure of the communications protocols relied upon by Microsoft’s PC operating system to interoperate with its server operating systems was intended to advance the communication between non-Microsoft server operating systems and Windows.

The states met their burden of establishing that the delay in the availability of the communications protocols constituted changed circumstances, which have prevented the final judgments from achieving their principal objectives, according to the court.

“More than five years after the Communications Protocols and related technical documentation were required to be available to licensees under § III.E, the documentation envisioned by that Section is still not available to licensees in a complete, useable, and certifiably accurate form,” the court explained.

Microsoft argued that it had never been found to be out of compliance with the “expiring provisions” of the final judgments. The court noted, however, that “the compliance and enforcement road” had not necessarily been “smooth.” In any event, the court refused to accept this compliance as grounds for denying the moving states’ motions or “relieving Microsoft of the burden of “operating under the shadow of a judicial decree.’”

Appropriate Legal Standard

The court did not resolve the “thorny” issue of the appropriate legal standard to apply to the motions to extend. The moving states argued that the court had broad discretion to modify the decree in order to accomplish its intended result, while Microsoft argued that modification of a consent decree required a significant change in circumstances. The court concluded that the moving states met their burden under either test.

The January 29, 2008, decision in State of New York v. Microsoft Corp., Civil Action No. 1998-1233, will appear at 2008-1 Trade Cases ¶76,020.

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