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No politics behind settlement, Microsoft says

In the first of two legal briefs expected this week to address the two tracks in its landmark antitrust case, the company asserts all communications were aboveboard.

WASHINGTON--Microsoft on Monday filed the first of two legal briefs expected this week to address the pair of simultaneous tracks in its landmark antitrust case.

The first track, proceeding under the Tunney Act, will wrap up the company's November settlement with the Justice Department and nine of 18 states. Microsoft's three-page filing summarized all communications between the company and federal government employees.

Microsoft's document indicates that all communications took place within the context of settlement discussions. The settlement is partway through a 60-day period of public comment.

"The settlement reached with the Department of Justice and nine of the plaintiff states is a tough but fair compromise," said Microsoft spokesman Vivek Varma. "We are committed to complying fully with the proposed decree and remain hopeful that we can resolve any outstanding issues as quickly as possible in the interest of consumers and the industry."

Still, the Tunney Act requires a judge to review a proposed settlement to ensure it is in the public interest.

"The Tunney Act makes sure there aren't any backroom, smoke-filled deals like there were with the ITT deal back in the late 1960s," said Glenn Manishin, an antitrust lawyer with Kelley Drye & Warren in Vienna, Va., referring to a Nixon-era settlement that critics charged was politically motivated.

On Wednesday, Microsoft is expected to file another legal brief addressing the second track of the case: continuing litigation. Nine states--California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia--and the District of Columbia balked at a settlement and opted to move to the next phase of the case, which would determine a remedy for Microsoft's anti-competitive actions.

The states filed their remedy proposal Friday. They asked a federal judge to give other companies broad access to Microsoft source code, including that for its Internet Explorer browser. The states also want the software company to auction off licenses to Microsoft Office so it can be used on other operating systems. Another provision would compel Microsoft to include Sun Microsystems' Java in Windows for 10 years.

Some critics charge that parts of the remedy proposal are designed to benefit Microsoft competitors.

Microsoft's next filing will include its own remedy proposal, which is expected to be more in line with the Justice Department settlement, and a response to the states' Friday filing.

Also on Wednesday, the Senate Judiciary Committee plans to convene a hearing, "The Microsoft Settlement: A Look to the Future." Assistant Attorney General Charles James, Stanford law professor Lawrence Lessig and Red Hat CEO Matthew Szulik are among those scheduled to testify.

Sen. Patrick Lahey, D-Vt., is overseeing the hearing, where Sen. Orrin Hatch, R-Utah, is expected to play a dominant role. Both senators' states are home to Microsoft competitors.

The hearing, which could put James in the hot seat for the settlement he cut with Microsoft, "has nothing to do with" the Tunney Act proceeding, said Emmett Stanton, an antitrust lawyer with Fenwick & West in Palo Alto, Calif.

"These are oversight hearings," he continued. "They're just performing their role of monitoring what the Justice Department does and every once in a while bringing in an appointed office holder and boxing him about the ears."

U.S. District Judge Colleen Kollar-Kotelly could accept or reject the settlement proposal by late February. But the Senate hearings should have no bearing on her decision process.

"The only time she has to listen to the Senate is when there are two-thirds of them," said Stanton, referring to legislative action.