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Experts debate remedies in Microsoft case

Experts debate remedies in Microsoft case

The most difficult problem of the Microsoft case has always been the question of remedies. Now that Judge Thomas Penfield Jackson is nearing a verdict and is almost certain to find the software giant guilty of some violations, he must decide what remedy to impose.

The goal of remedies, say antitrust experts, is not to punish a company but to restore competition. But how the judge will go about achieving that has been the proverbial million-dollar question in this case.

Jackson, who heard closing arguments last week, has offered no clues about what remedy he may impose. But a ruling against Microsoft - unless some last-minute settlement is reached - is almost a certainty in light of the Judge's harsh findings of fact about the company's business practices.

Legal experts, who recently debated the remedy issue at a Progress & Freedom Foundation forum in Washington, divide the remedy possibilities into roughly two camps: a conduct or behavioural remedy or a structural fix, such as a break up.

Conduct remedies attempt to restrain anti-competitive behaviour, but are intrusive and require ongoing governmental oversight, said Thomas Lenard, vice president for research at the Progress & Freedom Foundation and author of a proposal to divide Microsoft's Windows operating system operations into three separate companies. This plan, he said, "would immediately replace an operating system monopoly with competition".

But Kenneth Elzinga, an economics professor at the University of Virginia who has testified for Microsoft in its Bristol Technology antitrust case, said splitting the company's Windows operations into separate companies "would be enormously draining and diverting for Microsoft's management".

"No wonder Microsoft's competitors want structural relief," said Elzinga, who favours a conduct remedy. There are also the mechanics of breaking up the company, said Elzinga. When the Government broke up Standard Oil and America Tobacco, it focused on breaking up physical capital, not human capital.

"Past mergers have typically yielded a starting point for structural relief," said Elzinga. "Microsoft doesn't have production plants scattered around the world to form the building blocks for the so-called Baby Bills," he added.

A conduct remedy, however, would require ongoing Government oversight, said Robert Litan, a former deputy assistant general at the US Department of Justice who is now with the Brookings Institution.

"That's the one thing the Government and Microsoft can agree on - they don't want the judge running the computing industry," said Litan.


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