More states jump on Microsoft oversight bandwagon

But the DOJ opposes the five-year extension

Four more states have joined California and others to ask a federal judge that she hold Microsoft Corp. to its antitrust settlement for another five years.

New York, Maryland, Louisiana and Florida filed papers with U.S. District Court Judge Colleen Kollar-Kotelly late last Thursday asking her to continue monitoring Microsoft's compliance with the consent decree that the company struck with federal and state regulators in 2002. The four states added their voices to those raised by a California-led group of six states and the District of Columbia earlier in the week in asking for a five-year extension to the decree oversight.

Key parts of the consent decree are scheduled to expire Nov. 12, but the states have requested that those sections be enforced until November 2012. One part of the settlement that requires Microsoft to provide technical documentation on Windows protocols to rivals has already been extended to 2009.

The New York group's new filing appeared to be a turnabout from its previous position. As recently as the end of August, the four states had told Kollar-Kotelly in a filing that "[we] respectfully submit that the Final Judgments have achieved these goals." The goals referred to included eliminating Microsoft's illegal practices and restoring competition to the marketplace.

New York and the other states were joined by Ohio, Michigan and Wisconsin, as well as the Department of Justice, in the August filing, which did not ask for an extension.

On Thursday, however, the New York group changed its tune. "The process envisioned by the Final Judgments is far from complete," it wrote in the newest filing. "An extension is appropriate to assure that marketplace participants have sufficient opportunity to establish positions to compete against Microsoft, an entrenched monopolist."

The head of New York's antitrust bureau on Friday denied that his state had flip-flopped. "I don't think we had a change of heart at all," said Jay Himes.

Also on Friday, federal regulators weighed in. "The United States will not file a motion to extend the Final Judgment as it does not believe that the standard for such an extension has been met," wrote several attorneys in the DOJ's antitrust division.

That stance was immediately criticized by the states asking for an extension. In yet another filing, made today, both the California and New York groups accused the DOJ of waffling. On Thursday, according to the states, the federal regulators voiced their position during a conference call, saying they would neither oppose nor join the extension and would take no position on the motions' merits.

"On Friday afternoon, the United States changed course," charged the states in their Monday filing. The states keyed in on the part of the DOJ's statement that said it "did not believe that a standard for such an extension has been met," to highlight its new position as antiextension rather than the neutral position of a day earlier.

The states asked Kollar-Kotelly to hear several requests -- including setting a deadline for any amicus curiae, or "friend of the court," filing by U.S. attorneys -- in a conference call tomorrow.

But all the legal maneuvering may be for naught, said Herbert Hovenkamp, a noted antitrust scholar from the University of Iowa College of Law. "Kollar-Kotelly is going to have to have some evidence that the decree hasn't done what it's supposed to extend," said Hovenkamp. "She'll need more than what she's heard."

The underlying problem, which he saw as insurmountable, is that the decree has no evaluation mechanism. "Usually decrees have some kind of re-evaluation at the back end," said Hovenkamp. "Has the market become more competitive? If not, then the court can come back in and do something more aggressive."

That's missing here, however. "There's nothing in the decree that requires the market to become more competitive," noted Hovenkamp. "There isn't any evaluation mechanism here, other than just compliance with the decree. And Microsoft has done a reasonably good job of complying."

Without a way to evaluate current competitive conditions, Hovenkamp said, the Microsoft decree is "like if someone who is an alcoholic is ordered to go to [Alcoholics Anonymous], but the only way they evaluate the order is whether he attended meetings, not whether he stopped drinking."

But he thought that the states are making the right move, even if it proves futile in the end. "My own view has been that it is in the states' interest to extend. We're just starting to see a little bit of progress, and if the pressure on Microsoft through this decree evaporates, there's a fear that Microsoft will take the gloves off again."

Microsoft's position remained unchanged today. "We believe the consent decree has served its purpose," said company spokesman David Bowermaster. "Microsoft has changed its practices and committed to a broad set of principles going forward that go beyond the requirements of the consent decree."

Microsoft will file a formal response to the extension motions on Oct. 30, Bowermaster added.

Kollar-Kotelly has scheduled a status hearing for Nov. 6, at which time she is expected to rule on the motions to extend the court's oversight.

Copyright © 2007 IDG Communications, Inc.

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