Antitrust for Dummies

Article excerpt

The good news about the Microsoft case is that it is no longer in the hands of one Thomas Penfield Jackson. Jackson, you may recall, is the federal judge in Washington, D.C., who ruled against Microsoft, finding that the software giant had violated antitrust law, undercut rivals, and inhibited innovation. The remedy Jackson ordered was nothing less than Microsoft's dismemberment-that it be split into two smaller companies. And pending the split, Microsoft would be shackled by a number of restrictions on its conduct.

Microsoft may not be the most appealing company around. But the case brought by the Justice Department's Antitrust Division was a weak one and should have been rejected by Judge Jackson. Fortunately, courts like his don't have the last word. There are courts of appeal, and of course Microsoft has appealed. Soon the United States Court of Appeals for the District of Columbia, which will likely be a friendlier venue, will have the chance to reverse Jackson and rebuke the government. Let's hope they take it.

Here is what Jackson did: Ran a trial corrupted by procedural irregularities. Made findings of fact that were plainly erroneous. Drew unjustified legal conclusions. And rubber-stamped government remedies that were neither proportionate nor even related to Microsoft's alleged infractions.

In its initial complaint, the Justice Department said that Microsoft had illegally "tied" the Internet Explorer browser to the Windows operating system. In other words, the two products were sold as a single package and any buyer who wanted to acquire Windows would have to take Internet Explorer as well. According to Justice, Microsoft had included the free browser not to make Windows more attractive, but for the sole purpose of ending a vaguely-described "middleware threat" from Netscape's browser and Sun Microsystems' Java programming language. When the D.C. Circuit ruled that adding Internet browsing capabilities to Windows did not constitute illegal tying, the government vastly enlarged the scope of the trial. Despite the amplified charges, Jackson never required the government to include them in an amended complaint. Instead, he simply assured Microsoft that he "would not be making any findings" and "would not predicate any relief '- i.e., remedies-based on the new allegations. In the end, those assurances meant nothing, for Jackson proceeded to do what he said he would not.

Jackson's courtroom was tilted against Microsoft from start to finish. Jackson gave the company less than five months to prepare for trial on the original charges, and even less time to defend against the charges Justice later added. And once the trial had been held and the time came for determining appropriate remedies, Jackson rubber-stamped what Justice proposed, making not a single material change. Microsoft was to be split into two companies designed by government lawyers, and its business practices were to be tightly regulated for at least three years, possibly ten. Jackson heard no evidence on the efficacy of these remedies, and, despite a promise to do so, he offered Microsoft no opportunity to research their impact.

During and after the trial Jackson granted "friendly, informal and unstructured" interviews to the New York Times. He also commented on Microsoft's legal strategy and the integrity of company witnesses to the Washington Post, Wall Street Journal, Newsweek, and CNN. That publicity blitz ignored the clear mandate of Canon 3A(6) of the Code of Conduct for United States Judges to 11 avoid public comment on the merits of a pending or impending action.. until completion of the appellate process."

Jackson thus presided over a trial that denied Microsoft basic fairness-what the lawyers call due process. But this was not the worst of it. Like any trial judge, Jackson had to engage in fact-finding and make conclusions of law based on those findings before proceeding to the remedies stage. But Jackson didn't prove equal to these tasks. …