Microsoft, Intuit Vow To Fight Companies Plan To Defend Merger Against Government’s Attempt To Block It In Court

Microsoft Corp. and Intuit Inc. say they will vigorously fight the federal government’s attempt to block their merger, regardless of how long the court battle might take.

“Our enthusiasm for bringing Microsoft and Intuit together is very, very strong, exactly like it was when we first announced the plan” in October, said Microsoft Chairman Bill Gates.

Gates, speaking to reporters and Wall Street analysts during a telephone conference call, said Microsoft would push for a speedy trial to “give us a chance to explain why we don’t see any competitive problems here. In fact, we see increasing competition coming.”

Justice Department attorneys sued Microsoft and California-based Intuit Thursday in U.S. District Court in San Francisco, claiming Microsoft’s acquisition of Intuit would create higher software prices, limit innovation and threaten the future of electronic banking.

The complaint alleged that the $2 billion deal, the largest in the history of the software industry, would give Microsoft an unfair advantage in the market for personal-finance software and banking by personal computer.

Under terms of the deal, Microsoft would acquire Intuit’s most popular product, the Quicken electronic checkbook program, which has an estimated seven million users and 70 percent market share. Those customers could then connect to the new Microsoft Network online service (due to open in August) and use Quicken to pay bills and buy goods electronically.

The lawsuit surprised some stock traders and industry watchers who expected the government to announce a deal with Microsoft limiting the ways the company could market Quicken.

“We think they might be posturing to pressure Microsoft and see what kind of settlement they’ll get,” said Michael Schwartz of Gabriel Capital in New York.

Some observers said Justice might have been caving in to political pressure to get tough with Microsoft. The department settled a separate antitrust case with Microsoft last summer - an agreement that has been widely criticized and rejected by a federal judge in Washington, D.C. Microsoft and Justice have appealed that judge’s ruling.

All parties involved in the latest case - Justice, Microsoft and Intuit - spoke as if there was no chance of settlement this time.

Despite the stern rhetoric, the two sides are negotiating a deal under which Justice would agree to an expedited trial if Microsoft promised not to attempt to complete a merger with Intuit before the case was heard.