U.S. v. Microsoft, CIV.A.98-1232(CKK).

• Decision Date: 01 November 2002
• Docket Number: No. CIV.A.98-1232(CKK).,CIV.A.98-1232(CKK).
• Parties: UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

231 F.Supp.2d 144

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

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

United States District Court, District of Columbia.

November 1, 2002.

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Philip Beck, Mary Jean Moltenbrey, Jacqueline S. Kelley, U.S. Dept. of Justice, Washington, DC, Renata B. Hesse, Phillip

R. Malone, U.S. Dept. of Justice, Antitrust Div. Washington, DC, for U.S.

Steven F. Benz, Kellogg, Huber, Hansen Todd & Evans, PLLC, Washington, DC, for California plaintiffs.

Jeffrey Blumenfeld, Gray Cary Ware & Freidenrich, Washington, DC, for NetAction and Computer Professionals for Social Responsibility.

Jay Ward Brown, Levine, Sullivan & Koch, LLP, Washington, DC, for Cable News Network, LP, LLP, Dow Jones & Co., Inc., Los Angeles Times, Associated Press, Washington Post, USA Today.

Donald L. Flexner, Boies, Schiller & Flexner, LLP, Washington, DC, for SBC Communications, Inc.

Judith L. Harris, Reed Smith, LLP, Washington, DC, for Novell, Inc.

Jay L. Himes, N.Y. Dept. of Law, New York City, for Commonwealth of Kentucky, State of Ill., State of Louisiana, State of Maryland, State of Mich., State of N.Y., State of N.C., State of Ohio.

Steven L. Holley, Richard J. Iroksky, John L. Warden, Sullivan & Cromwell, New York City, William H. Neukom. Microsoft Corp., Redmond, WA, Bradley Paul Smith, Sullivan & Cromwell, Washington, DC, for Microsoft.

Michael Lenett, Cuneo Law Group, Washington, DC, for American Antitrust Institute, Inc.

Bradley S. Lui, Morrison & Foerster, LLP, Washington, DC, Jason M. Mahler, Computer & Communications Industry Ass'n, Washington, DC, for Computer & Communications Industry Ass'n.

Glenn B. Manishin, Kelley Drye & Warren, LLP, Washington, DC, for Software & Information Industry Ass'n.

Aileen Meyer, Washington, DC, for San Jose Mercury News, Inc.

Peter Peckarsky, Washington, DC, for Relpromax Antitrust, Inc.

Gene C. Schaerr, Sidley Austin Brown & Wood, LLP, for Association for Competitive Technology.

Brendan V. Sullivan, Jr., Williams & Connolly, LLP, Washington, DC, for District of Columbia, State of Cal., State of Conn., State of Fla., State of Iowa, State of Kan., State of Mass., State of Minn., State of Utah.

Kenneth W. Starr, Kirkland & Ellis, Washington, DC, for ProComp.

James S. Turner, Swankin & Turner, Washington, DC, for Consumers for Computing Choice and Open Platform Working Group, Free Software Foundation, Andreas Pour, Dan Kegel, John Carroll, Mason Thomas.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

Remaining in this case for the Court's determination is the resolution of a single issue: whether entry of the final judgment proposed by the parties is in the public interest. The Court makes this determination pursuant to the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. § 16(b)-(h). In a previous Memorandum Opinion, the Court reviewed the pertinent procedural history and determined that the parties had satisfied the other requirements of the Tunney Act. See generally United States v. Microsoft Corp., 215 F.Supp.2d 1 (D.D.C.2002). Having reviewed the voluminous record in this case and considered the factors enumerated in 15 U.S.C. § 16(e), the Court finds that, with the exception of the provisions relating to the retention of the Court's jurisdiction, the proposed consent decree is in the public interest. Accordingly, the Court conditionally approves the proposed consent decree as the final judgment in this case, pending the prompt agreement by the parties to a modification of the Court's retention of its jurisdiction.

I. PROCEDURAL HISTORY

On May 18, 1998, the United States filed a civil complaint alleging that Microsoft had engaged in anticompetitive conduct in violation of §§ 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. Not long after filing, the two cases were consolidated and thereafter, proceeded jointly through discovery and a 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) (hereinafter cited as "Findings of Fact"), and on April 3, 2000, Judge Jackson entered conclusions of law, finding Microsoft liable for violations of §§ 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). On June 7, 2000, Judge Jackson entered final judgment in the consolidated cases and imposed a structural remedy of divestiture for Microsoft's violations of the Sherman Act. United States v. Microsoft Corp., 97 F.Supp.2d 59 (D.D.C.2000).

Microsoft appealed, and the United States Court of Appeals for the District of Columbia Circuit determined to consider the appeals in the consolidated cases en banc. Following extensive briefing and two days of oral argument, the appellate court issued a unanimous per curiam opinion 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. See United States v. Microsoft Corp., 253 F.3d 34 (D.C.Cir.2001) (en banc). Following reassignment, on September 28, 2001, this Court ordered that the parties enter into intensive settlement negotiations. United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28, 2001) (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. United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28, 2001) (setting discovery guidelines and schedule).

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, filed with the Court as the "Revised Proposed Final Judgment" on November 6, 2001. 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, State of New York, et. al. v. Microsoft Corp., No. 98-1233 (D.D.C.). United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Nov. 2, 2001) (vacating the Sept. 28, 2001, 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 along with some of the plaintiffs in State of New York, et. al. v. Microsoft Corp.,¹ the United States and Microsoft commenced the process of obtaining judicial approval of the proposed consent decree pursuant to the Tunney Act, 15 U.S.C. § 16(b)-(h).

The November 6, 2001, filing of the Revised Proposed Final Judgment ("RPFJ") was accompanied by a "Stipulation" entered into by the United States, Microsoft, and the Settling States. The Stipulation provided that the Court could enter the proposed final judgment "at any time after compliance with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16, and without further notice to any party or other proceedings." Stipulation and Revised Proposed Final Judgment at 1. The United States filed its "competitive impact statement" ("CIS") with the Court on November 15, 2001. Pursuant to 15 U.S.C. § 16(b), the United States published the proposed final judgment, along with the CIS, in the Federal Register on November 28, 2001. Revised Proposed Final Judgment and Competitive Impact Statement, 66 Fed.Reg. 59,452 (Nov. 28, 2001). On December 10, 2001, Defendant Microsoft filed with the Court its "description of ... written or oral communications by or on behalf of [Microsoft] ... with any officer or employee of the United States concerning or relevant to" the proposed consent decree. Thereafter, Microsoft supplemented this description on March 20, 2002.

The United States received 32,392 comments on the proposed final judgment and provided the full text of these comments to the Court on February 28, 2002. On March 1, 2002, the United States submitted the full text of the public's comments for publication in the Federal Register, and on May 3, 2002, the public comments appeared in the Federal Register pursuant to that submission. United States' Certificate of Compliance at 4; Public Comments, 67 Fed.Reg. 23,654 (Books 2-12) (May 3, 2002). On May 9, 2002, the United States published in the Federal Register an "addendum containing the correct text of thirteen (13) comments for which either an incomplete or incorrect electronic version had been included in the original submission to the Federal Register." Addendum to Public Comments, 67 Fed.Reg. 31,373 (May 9, 2002); United States Certificate of Compliance at 4. The United States certified compliance with 15 U.S.C. § 16(b)-(d) on May 9, 2002. On July 1, 2002, this Court confirmed the applicability of the Tunney Act to these proceedings and found that the parties had complied with the Act's requirements such that the matter was ripe for the Court's determination of the public interest. See United States v. Microsoft Corp., 215 F.Supp.2d 1 (D.D.C.2002).²

II. TUNNEY ACT

A. Tunney Act

Concerned with the appearance of impropriety engendered by the secrecy of consent decree negotiations in antitrust cases, in addition to exposing to "sunlight" the process by which such consent decrees are negotiated, 119 Cong. Rec. at 24599, Congress determined that the judiciary should do more than merely "rubber stamp" proposed consent decrees in anti-trust cases, H. Rep. No. 93-1463, at 8 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6536; S.Rep. No. 93-298, at 5 (1973). See also ...