Microsoft Deal Rejected Federal Judge Decides Settlement Wouldn’t Break Company’s Monopoly

A federal judge rejected the Justice Department’s proposed antitrust settlement with Microsoft Corp., saying it fails to break the software giant’s monopoly or correct its “anticompetitive practices.”

In a 45-page ruling issued late Tuesday, U.S. District Judge Stanley Sporkin said he was unable to find - as required by law - that the proposed settlement was in the public interest.

“Microsoft has a monopoly on the market for personal computer operating systems,” Sporkin declared, noting that company’s share of the market is consistently above 70 percent.

The decree, he said, applies only to future licensing practices by Microsoft. The government, he added, failed to show how that would “remedy the unfair advantage Microsoft gained through its anticompetitive practices.”

“Simply telling a defendant to go forth and sin no more does little or nothing to address the unfair advantage it has already gained,” Sporkin wrote. “The decree is too little, too late.”

Microsoft spokesman Mich Mathews said the company needed time to read Sporkin’s opinion before deciding its next step.

“We are disappointed,” Mathews said.

Justice spokeswoman Gina Talamona said antitrust division attorneys were reviewing the ruling. They declined further comment. “I’m going to read the opinion,” said Attorney General Janet Reno.

Sporkin’s rejection of the proposed settlement leaves the government with several options: It could appeal his ruling; it could go to trial on its allegations against Microsoft, or it could try to negotiate a new agrement with the company that would satisfy Sporkin.

The proposed settlement, which was reached last July 15, would have prohibited Microsoft from engaging in certain licensing procedures that the government argued gave the company an unfair advantage in selling its computer operating systems and other software to companies that make computer hardware.

The agreement was reached after four years of investigation, first by the Federal Trade Commission and then by the Justice Department.

Sporkin cited four reasons for his decision:

The government declined to supply sufficient information about the agreement.

The scope of the settlement is too narrow.

The government and Microsoft “have been unable and unwilling to adequately address certain anticompetitive practices.”

The settlement has inadequate mechanisms to insure the company will comply with its provisions.

Sporkin set a hearing for March 16 for further proceedings in the case.