Here is a great story on why a settlement is good for both parties. Bloomberg.com.http://quote.bloomberg.com/analytics/bquote.cgi?story_num=42519271&view=story&version=markets.cfg
Microsoft Settlement Would Help Both Sides, Legal Experts Say
Microsoft Settlement Would Help Both Sides, Legal Experts Say
Washington, March 29 (Bloomberg) -- While Microsoft Corp. and antitrust enforcers continue trading public jabs about the merits of the government's suit against the software company, both sides would have much to gain if settlement talks yield an out-of-court agreement, legal experts say.
Microsoft is set to meet Tuesday afternoon with the U.S. Justice Department and 19 states in Washington in what could be the first in a series of negotiations. Talks are expected to focus on a four-page settlement proposal Microsoft submitted as a starting point for negotiations that could end the company's lengthy, distracting antitrust case.
Though government lawyers have voiced skepticism about Microsoft's overture, an out-of-court settlement likely would begin immediately curbing some of Microsoft's allegedly anti- competitive behavior. It also would allow the government to dodge the question of what remedies to seek in court, and it would pre- empt an appeals-court ruling that could reverse any lower-court success, they say. ''Microsoft would be settling on the basis that it would change its behavior and that may be all the Justice Department is ever going to get, since they've never come forward with a convincing argument why a structural remedy would improve competition in this area,'' said Robert Heidt, a law professor at Indiana University.
Last week, Microsoft Chairman Bill Gates repeatedly expressed his willingness to settle the lawsuit -- as long as the company's freedom to integrate new technologies into the Windows computer operating system is preserved. Justice Department antitrust chief Joel Klein said he'd agree to a settlement that ''assures that similar antitrust violations don't happen in the future.''
Microsoft shares, reflecting a 2-for-1 stock split, rose 3 1/4 to 92 3/8 in late-afternoon trading as the company announced an internal reorganization designed to better meet customers' needs.
Quick Fix
Reaching a settlement now would quickly start restricting what antitrust enforcers have characterized as Microsoft's pattern of anti-competitive behavior. ''A settlement's primary virtue is certainty,'' said Daniel Wall, a San Francisco antitrust attorney and former Justice Department official.
Uncertainty is big factor in this case, Wall said, thanks to a ruling last June by a Washington-based appeals court. That decision backed Microsoft's contention that the law protects its right to integrate new technologies such as its Internet Explorer Web browser into Windows.
The court said such integration was legal as long as it provided consumers a benefit. That appellate decision voided a ruling by U.S. District Judge Thomas Penfield Jackson that was favorable to the Justice Department. Penfield is presiding in the current trial.
The Justice Department and states have ''got to decide how they are going to roll the dice in terms of what they can get out of the Court of Appeals,'' said Marc Schildkraut, a Washington antitrust attorney.
Even though Microsoft's ''performance in the litigation was pretty dreadful,'' the company still could advance strong legal arguments in any appeal of an unfavorable ruling by Jackson, Schildkraut said.
Alternatively, Microsoft could avoid the danger of putting its fate in the hands of a judge if it comes to terms with the government.
Now or Later
Without a settlement, it could take years before a final ruling hits Microsoft -- an by extension, the constantly changing computer industry. By the time any remedies were imposed by a court, the contours of the industry could change, potentially making the cure obsolete, experts say.
During the five-month trial, America Online Inc. has acquired Netscape Communications Corp., creating a new competitor to Microsoft on the Internet. Also, the Linux operating system open-source code movement -- which could threaten Windows -- has picked up speed with Compaq Computer Corp., International Business Machines Corp. and others making investments in Linux. ''You could be looking at 12, 18, possibly 24 months,'' said Mark Levy, a Washington attorney specializing in the U.S. Supreme Court.
Though both sides could seek an expedited review of the case, it's also ''possible, at the other end of the spectrum, that it could be 3 years before the Supreme Court acts,'' Levy said. ''That's always a consideration.''
Remedies
For months, antitrust enforcers have discussed among themselves and with high-tech and economic experts what remedies they should seek should they win. Possibilities include structural relief, such as breaking up the company, or requiring an open auction of Windows' secret computer code.
Microsoft President Steve Ballmer, in a conference call about the company's reorganization, said any attempt to break up the company would not be acceptable.
Even Silicon Valley executives who have testified against Microsoft in the antitrust case, such as former Netscape Chief Executive James Barksdale, warn against breaking up the company. They point to the fact that Microsoft's universal licensing of its software has helped propel the high-tech industry.
As it stands, the Justice Department suggested a separate set of hearings on the remedies issue after Jackson decides whether Microsoft illegally abused a monopoly it enjoys with Windows. Such hearings would delay any appeals.
Legal experts watching the Microsoft trial recall the government's 13-year antitrust battle with IBM, which ended in an out-of-court settlement. That case should be instructive to both sides, Heidt said.
He observed that tens of millions of dollars were wasted on litigation before the Reagan Administration pulled the plug on that case. ''The lesson is that in rapidly changing industries like this, these kind of cases tend to be a huge waste as far as effecting any good.''
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min
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