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Financial adviser to study Microsoft antitrust remedies

Greenhill & Co. of New York will advise the federal government on the financial implications of a "full range" of potential remedies in the landmark antitrust case.

The U.S. Justice Department today retained a New York investment firm to advise on possible remedies in the landmark Microsoft antitrust trial.

Greenhill & Co. will act "as financial advisors to assist the division in analyzing financial aspects of the full range of potential remedies in U.S. vs. Microsoft, including conduct and structural relief," Justice Department spokeswoman Gina Talamona said.

Today's announcement follows, by two days, the first meeting in settlement talks between Microsoft, the Justice Department and 19 states.

A source close to the government said the firm's advice would be used in all on-going processes, including settlement talks, but that the timing in no way indicates the government would pursue settlement instead of seeing the case to its conclusion.

Based on findings of fact issued on Nov. 5, U.S. District Judge Thomas Penfield Jackson is eventually expected to rule against Microsoft in the case.

On Tuesday, representatives for Microsoft and the government met with judge Richard Posner to discuss possible settlement. Jackson asked Posner, who heads the U.S. Court of Appeals for the 7the Circuit, to mediate between the parties. This week's first meeting in Chicago ended after two hours, with a future meeting planned but not scheduled.

Sources close to the negotiations said that because of directions given by Posner and an expressed interest by all parties to negotiate in earnest, both sides plan to closely guard details of the settlement talks.

The choice of Greenhill & Co., which specializes in mergers and acquisitions, divestitures and cross-border transactions, in no way reflects "what the government might recommend in court or any other ongoing process," said a source close to the government.

But it is not unlikely that the government will ask Greenhill & Co. to offer possible scenarios for settlement talks as well as recommended remedies should Jackson, as expected, rule against Microsoft, said antitrust experts.

The investment firm is expected to offer conduct-related solutions as well as possible divestiture scenarios for the breakup of Microsoft.

While settlement talks started off without a hitch, antitrust experts are skeptical the government and Microsoft can reach an agreement. Bob Lande, an antitrust professor at the University of Baltimore School Law said he doesn't think settlement is possible.

"I put things at 50-50, five chances out of 10, they can settle," said George Washington University Law School professor Bill Kovacic. "I do think Posner can succeed in making the sides appreciate the risks better than they do now. But I don't know if he can identify the middle ground solution that lets the government declare victory in a convincing way."

One problem is division in the government camp over what to do about Microsoft, with some states taking a much harder line than the Justice Department. Jackson pegged Posner to mediate, in part, because of "divergent views" in the government camp.