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To: John F. Dowd who wrote (56130)	10/31/2001 10:53:28 PM
From: Jim Lamb	Respond to of 77400

BULLETIN>> MICROSOFT, US SEEN IN SETTLEMENT PACT More Microsoft seen in settlement pact By William L. Watts, CBS.MarketWatch.com Last Update: 10:29 PM ET Oct. 31, 2001 WASHINGTON (CBS.MW) -- Microsoft and the Bush administration reportedly have reached a tentative agreement to settle the historic antitrust case against the software giant. The 18 states that are also trying the case were reviewing terms of the deal Wednesday evening, the Associated Press reported, citing unnamed sources familiar with the talks. Terms of the prospective settlement were closely guarded, and people close to the negotiations cautioned that precise language was still being worked out even between Microsoft (MSFT: news, chart, profile) and the Justice Department, the AP said. The attorneys generals from the states that sued Microsoft for antitrust violations were weighing whether to sign onto the deal, the sources said. The AP reported Charles James, assistant U.S. attorney for antitrust, disclosed the agreement to the attorneys general on Wednesday and said Microsoft also would accept the terms, the sources said, speaking only on condition of anonymity. Whether the states would go along with the Bush administration, however, has long been a question fraught with potential problems.Last week, the states hired high-profile Washington lawyer Brendan Sullivan to represent them, signaling they may pursue tougher remedies against the company if they're unsatisfied with the Justice Department's approach. Publicly, federal and state officials have expressed unity. But state prosecutors have expressed concerns privately that U.S. antitrust chief James could give away too much during the mediated settlement talks. Earlier this month, U.S. District Judge Colleen Kollar-Kotelly appointed Eric D. Green, a Boston University law professor and professional mediator, to supervise settlement negotitations. If the parties can't reach an agreement by this Friday's deadline, a court-ordered remedy process would begin. See earlier story. State attorneys general have sent other signals that they were wary of the Justice Department's approach to the case. FRONT PAGE NEWS Microsoft seen in antitrust settlement pact with U.S. Dow, Nasdaq split as techs rally and blue-chips sag Enron ends 10-day skid; discloses probe New York anthrax victim dies Market news and more! Sign up to receive FREE email newsletters Get the latest news 24 hours a day from our 100-person news team. In September, California and New York prosecutors warned the Justice Department that they were ready to strike out on their own to rein in Microsoft if they aren't satisfied with the antitrust remedy ultimately pursued by the federal government. See earlier story. In particular, the states have urged the government to take a close look at Microsoft's controversial Windows XP operating system upgrade, which is to be officially launched Thursday, before asking a federal judge for a remedy to the company's antitrust violations. See related story. The Justice Department announced last month that it would no longer seek a breakup of the software giant, but would "model" its remedy proposal on a set of interim restrictions proposed by the original trial judge, Thomas Penfield Jackson, last summer. See earlier story. The remedy portion of the case was assigned to Kollar-Kotelly by the U.S. Court of Appeals, which upheld a ruling by U.S. District Judge Thomas Penfield Jackson that Microsoft illegally abused its Windows monopoly on the market for PC operating systems. That charge was the centerpiece of the government case. The appeals court, however, overturned Jackson's order to split the company in two, finding that Jackson failed to hold hearings needed to decide a remedy. It also disqualified Jackson from further proceedings, citing the appearance of bias as a result of comments to reporters during the trial. The appellate court also overturned a finding that Microsoft illegally tied its Internet Explorer browser to Windows and said the lower court using a stricter legal standard could revisit the claim. The government subsequently dropped the tying claim, which was seen as a minor part of the case. Justice Department officials have said the decision to drop pursuit of a breakup was designed to streamline the case and avoid a protracted battle over a remedy in order to speed relief to consumers. Officials insisted that the decision didn't represent a concession to the software giant. On Wall Street, shares of Microsoft (MSFT: news, chart, profile) fell 73 cents to $58.15 on Wednesday.