Microsoft, Justice Department refuse mediator in settlement efforts |

Microsoft, Justice Department refuse mediator in settlement efforts


WASHINGTON (AP) – Microsoft and the Justice Department told the new judge in their antitrust case Thursday that they want to stick with private settlement talks and do not need a mediator. Analysts said a settlement could be important to the flagging economy.

The computer industry has continued its decline despite the imminent release of a major update to Microsoft’s flagship Windows operating system.

Like the stock market overall, Microsoft’s stock dropped Thursday afternoon, to $51.35 per share, a decline of $2.52.

The jointly filed status report was the first substantive discussion by the software giant and the government with U.S. District Judge Colleen Kollar-Kotelly.

Microsoft and the Justice Department ”will continue to seek settlement of this matter through private discussions, which are ongoing and should continue simultaneously with proceedings addressed to remedy,” the report said.

The previous trial court judge in the case, Thomas Penfield Jackson, forced the government and Microsoft into four-month settlement talks and eventually named an appeals judge as a mediator. Those talks collapsed, and both sides made clear they would prefer to avoid a mediator now.

”The parties believe that further alternative dispute resolution procedures would be unproductive at this time,” they wrote.

Kollar-Kotelly was appointed to the case after a unanimous appeals court threw out Jackson’s order to break the company in two. The same appeals court upheld many of Jackson’s other findings, however, including that Microsoft operated an illegal monopoly that hurt competition.

Jackson was removed from the case after attacking Microsoft and its executives in media interviews.

While government prosecutors and Microsoft lawyers have met, lawyers close to the talks have said there has been no significant progress.

Rob Enderle, a business analyst with Giga Information Group, said the antitrust case and the unclear status of the upcoming Windows XP operating system ”provides one more reason (for customers) not to purchase.”

Enderle said both sides would be helped if they were no longer distracted by the case.

”Given the current environment, it’s probably important that the Department of Justice focuses on a different class of threat for a while,” he said, referring to the terrorism investigation. ”They need every resource they’ve got for the current crisis.”

The Bush Justice Department has been slowly backing away from the Clinton administration’s hard line. Earlier this month, prosecutors abandoned efforts to divide Microsoft.

Instead, the government wants restrictions on Microsoft’s business practices that would restore competition to the market and penalize Microsoft for previous violations.

The Justice Department wants both sides to offer their proposed penalties by Nov. 9 at the latest, and have a hearing in early February.

The hearing will resemble a trial, including witnesses and evidence.

”We are working to resolve this case short of further litigation, at the same time we think that an appropriate remedy can be formulated quickly given the court of appeals’ guidance,” Microsoft spokesman Vivek Varma said.

Justice Department spokeswoman Gina Talamona declined comment.

Kollar-Kotelly will decide on a schedule at a hearing Sept. 28.

Meanwhile, Microsoft is still appealing the case to the Supreme Court. The justices are expected to decide in October whether to take the case.

Microsoft’s Windows XP is scheduled to be sold to consumers within weeks. Both the Justice Department and state prosecutors have expressed concerns with the product, and said they may want restrictions on its sale.

Howard University law professor Andy Gavil said the differences in schedules indicate that Microsoft wants to keep prolonging the case.

”At this stage, I’m not sure where Microsoft’s incentive is to settle the case,” Gavil said. ”Every month that Windows XP is out there, (Microsoft has) an interest in continuing to sell it and not be constrained in any way.”

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