U.S. v. Microsoft Corp.

• Decision Date: 01 July 2002
• Docket Number: No. CIV.A.98-1232(CKK).,CIV.A.98-1232(CKK).
• Citation: 215 F.Supp.2d 1
• Parties: UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

Page 1

215 F.Supp.2d 1

UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant.

No. CIV.A.98-1232(CKK).

United States District Court, District of Columbia.

July 1, 2002.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

On May 9, 2002, the United States filed its "Certificate of Compliance with the Tunney Act," certifying that "it has complied with the provisions" of the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16(b)-(h) ("Tunney Act"). United States Certificate of Compliance at 1. In so certifying, the United States leaves to this Court the final task of determining whether the "Second Revised Proposed Final Judgment" ("SRPFJ") resolves the above-captioned case in a manner that comports with the public interest. Preliminary to that determination, however, are two threshold issues. First, the Court must address whether the Tunney Act applies to this Court's consideration of the SRPFJ. Second, the Court is obliged to examine whether the provisions of the Tunney Act have, in fact, been satisfied.¹ Upon review of the record in this case, the voluminous filings of the United States, Microsoft, and amici curiae, the comments submitted by the public pursuant to 15 U.S.C. § 16(b), and the relevant law, the Court concludes that the Tunney Act applies to this case. The Court further concludes that the parties have complied with the Tunney Act's provisions such that this matter is ripe for the Court's public interest determination.

I. BACKGROUND

On May 18, 1998, the United States filed a civil complaint alleging that Microsoft had engaged in anticompetitive conduct in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. On that same date, a group of state plaintiffs filed a separate civil complaint alleging similar violations of federal law, as well as violations of the corresponding provisions of their various state laws. Shortly thereafter, the two cases were consolidated and proceeded jointly through discovery and trial on the merits. On November 5, 1999, Judge Thomas Penfield Jackson entered 412 findings of fact, United States v. Microsoft Corp., 84 F.Supp.2d 9 (D.D.C.1999) ("Findings of Fact"), and on April 3, 2000, Judge Jackson entered conclusions of law, finding Microsoft liable for violations of Sections 1 and 2 of the Sherman Act and the corresponding state law provisions, United States v. Microsoft Corp., 87 F.Supp.2d 30 (D.D.C.2000) ("Conclusions of Law"). On June 7, 2000, Judge Jackson entered final judgment in the consolidated cases and imposed a remedy for Microsoft's antitrust violations. United States v. Microsoft Corp., 97 F.Supp.2d 59 (D.D.C.2000).

Microsoft appealed, and the D.C. Circuit considered the consolidated cases en banc. Following extensive briefing and two days of oral argument, the D.C. Circuit issued a unanimous per curiam decision affirming in part, reversing in part, vacating the remedy decree in full, and remanding in part for remedy proceedings before a different district court judge.² United States v. Microsoft Corp., 253 F.3d 34 (D.C.Cir. 2001). Following reassignment, on September 28, 2002, this Court ordered the parties to enter into intensive settlement negotiations. United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28, 2001) (order setting a schedule for settlement discussions). On that same date, the Court entered a schedule for discovery and commencement of evidentiary proceedings, in the event that the cases were not resolved through settlement.

The United States and Microsoft were able to reach a resolution in United States v. Microsoft Corp., No. 98-1232 (D.D.C.), in the form of a proposed consent decree, which was filed with the Court as the "Revised Proposed Final Judgment" on November 6, 2001. The settlement negotiations were partially successful with regard to the companion case, State of New York, et al. v. Microsoft Corp., No. 98-1233 (D.D.C.); a portion of the Plaintiff States joined the settlement between the United States and Microsoft. Those states which opted not to join the settlement proposed a remedy distinct from that presented in the proposed consent decree. As a result, the Court vacated the discovery schedule with regard to United States v. Microsoft Corp. and deconsolidated that case from its companion case. See United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Nov. 2, 2001) (vacating the Scheduling Order with regard to Civil Action No. 98-1232); United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (Feb. 1, 2002) (deconsolidating cases). Rather than proceed to an evidentiary hearing on the issue of remedy, as did some of the plaintiffs in State of New York, et al. v. Microsoft Corp., the United States and Microsoft commenced the process for obtaining judicial approval of the proposed consent decree pursuant to the Tunney Act, 15 U.S.C. § 16(b)-(h). Additional facts relevant to the Court's discussion of the parties' compliance with the Tunney Act are recounted as appropriate below.

II. TUNNEY ACT, 15 U.S.C. § 16(b)-(h)

At the center of the inquiry before the Court is the Antitrust Penalties and Procedures Act, 15 U.S.C. § 16(b)-(h). The aforementioned statute, commonly referred to as the Tunney Act, applies to "[a]ny proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws." 15 U.S.C. § 16(b). Concerned with "the integrity of and public confidence in procedures relating to settlements via consent decree," H.R.Rep. No. 93-1463, at 6 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6536, Congress enacted the Tunney Act to prevent "judicial rubber stamping" of proposed consent decrees, id. at 8, reprinted in 1974 U.S.C.C.A.N. at 6538. See also United States v. Microsoft Corp., 56 F.3d 1448, 1458 (D.C.Cir.1995) (citing legislative history). The Tunney Act mandates that, prior to entry of a consent decree between the United States and the party charged with violation of the antitrust laws, "the court shall determine that the entry of such judgment is in the public interest." 15 U.S.C. § 16(e).

True to its name, the Antitrust Procedures and Penalties Act mandates compliance with a number of procedures before the Court can render its public interest determination as to the proposed penalties. See generally 15 U.S.C. § 16(b)-(h). The United States must first publish the proposed consent decree, accompanied by a "competitive impact statement,"³ in the Federal Register. Id. § 16(b). Section 16(b) further mandates that the United States file with the Court those materials and documents which it considers to be "determinative in formulating" the proposed consent decree. Id. Subsection (c) requires the United States to provide the public with notice of the proposed consent decree and competitive impact statement by publishing summaries of the two documents in "newspapers of general circulation of the district in which the case has been filed, in the District of Columbia, and in such other districts as the court may direct." Id. § 16(c). Following publication in the Federal Register, the public has an opportunity to submit comments to the United States regarding the proposed consent decree. Id. § 16(b). The United States is required to "receive and consider any written comments relating to the proposal for the consent judgment submitted under subsection (b) of [Section 16]." Id. § 16(d). Ultimately, the comments must be published in the Federal Register and filed with the District Court. Id. § 16(b). In concert with its receipt and consideration of the public comments, the United States is obliged to publish a response to the comments in the Federal Register and to file the response with the District Court. Id. § 16(d).

Although the Tunney Act burdens the United States with numerous requirements, the Act also demands certain action by the defendant proposing entry of a consent decree. Subsection (g) mandates that the defendant "file with the district court a description of any and all written or oral communications by or on behalf of such defendant ... with any officer or employee of the United States concerning or relevant to [the proposed consent decree]." Id. § 16(g). The Tunney Act exempts from the subsection (g) disclosures "any such communications made by counsel of record alone with the Attorney General or the employees of the Department of Justice." Id. § 16(g).

A. Applicability of the Tunney Act

Since announcing a settlement in this case, the parties have maintained that the Tunney Act governs the Court's consideration of the proposed consent decree. See generally Stipulation and Revised Proposed Final Judgment. Similarly, the Court has proceeded under the presumption that the Tunney Act applies to the Court's review of the proposed consent decree. See United States v. Microsoft Corp., No. 98-1232 (D.D.C. Nov. 8, 2001) (order setting schedule for compliance with the Tunney Act). Notwithstanding this presumption, it would be unwise to embark upon a Tunney Act analysis of the public interest in this case without first examining whether the Tunney Act governs these proceedings. Accordingly, the Court commences its analysis by considering whether the procedural posture of this case-which has proceeded through the liability stage and awaits only an order of remedy-affects the applicability of the Tunney Act to the Court's review of the proposed consent decree.

By simply reading the statute and applying the language to the facts of this case, there seems little room to argue that these proceedings are not governed by the Tunney Act. Once again, the Tunney Act applies to "[a]ny proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws." 15 U.S.C. § 16(b) (emphasis added). Despite this clear statutory language, "[i]t has been variously suggested the...