MS settlement talks to get started tomorrow

The judge appointed to mediate settlement talks in the Microsoft antitrust trial will meet for the first time tomorrow with lawyers representing Microsoft, the US Department of Justice and the 19 US states pursuing the case, a spokeswoman for one of the state attorneys general confirmed today.

Judge Richard Posner of the 7th Circuit US Court of Appeals, who was appointed earlier this month by US District Court Judge Thomas Penfield Jackson to mediate the settlement talks, will meet with the lawyers tomorrow in Chicago, the spokeswoman said.

Microsoft's legal woes have multiplied since Jackson on November 5 issued his "findings of fact", a preliminary ruling in which he labelled Microsoft a monopoly that has abused its position to bully rivals and limit consumer choice. Civil lawsuits against Microsoft on behalf of millions of people who use the company's Windows operating system have since been filed in California, New York, Alabama, Louisiana and Florida over the price of the software.

Those civil lawsuits provide Microsoft with a strong incentive to settle the case, one expert in antitrust law said last week. If Microsoft doesn't settle the government's case and Jackson determines that the software giant violated antitrust laws, that finding could be submitted as evidence in the civil cases, said John Stewart Smith, a partner with the Washington, D.C., law firm Nixon Peabody LLP.

If, on the other hand, Microsoft settles the case before the judge's final ruling, then Jackson's preliminary rulings can't be submitted as evidence in the various state civil actions, Smith said.

The US government also has an incentive to settle at this stage, particularly given the strong opinion expressed in Jackson's findings of fact, Smith said. Microsoft has indicated that it intends to appeal the case should the company lose it, and an appeals court could easily take some of the sting out of Jackson's conclusions, Smith added.

"Whatever (the government) gets from Jackson now, they will lose some of (it) at the court of appeals. Their case isn't going to get any better," he said.

The government may settle for political reasons also, Smith noted.

"I suspect Joel Klein would like to see this wrapped up on his watch," he said, referring to the head of the DoJ's antitrust division.

Microsoft couldn't have asked for a better person to mediate the settlement talks than Posner, who ascribes to a school of thought in antitrust law known as the Chicago school, Smith said. The Chicago school shuns the notion that big is necessarily bad, and believes that antitrust cases should focus on economics, and in particular whether consumers have been harmed, he said.

Posner is "the Bill Gates of antitrust law," Smith said.

Department of Justice lawyers, meanwhile, face a deadline of December 6 for submitting their conclusions of law, a DoJ spokeswoman said today. The brief gives the DoJ and state attorneys general a chance to spell out how they think Microsoft's actions broke federal antitrust law.

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