Microsoft is due to square off against state prosecutors in federal court on Monday over how soon hearings on antitrust sanctions against the software giant should begin.
At a hearing before U.S. District Court Judge Colleen Kollar-Kotelly, Microsoft's attorneys will argue that the judge should first decide whether to endorse a proposed settlement of the case and put off remedy hearings on stronger sanctions sought by nine state attorneys general remaining in the case.
But the holdout states, led by California attorney general Bill Lockyer, want a chance to argue for stronger sanctions before Kollar-Kotelly makes any decision on the settlement reached with the U.S. Justice Department and nine other states in the case.
The scheduling issue could be important, legal analysts say. Endorsement of the settlement, far in advance of hearings on further remedies, would make the dissenting states' effort to get stronger sanctions much more difficult, they said.
"It just makes it harder because then the court will be on record as saying the settlement with the Justice Department is consistent with the public interest, which is just one more hurdle the states would have to surmount," said Andy Strenio, an antitrust attorney with Powell, Goldstein, Frazer and Murphy LLP.
"Conversely, the states, I think, have in mind that if they can get their concerns heard first in detail by the judge, that makes it more likely that ... stronger relief will be ordered," Strenio said.
In a motion filed by Microsoft on Dec. 21, the company argued that it needed more time to prepare because nine states in the case were seeking a "dramatic expansion" of possible sanctions.
Under the original timetable, laid out by the judge three months ago, the remedy hearings were set to begin March 11. Tunney Act hearings into whether the proposed settlement is in the public interest are due to be held around the same time.
An appeals court in June upheld findings that the company violated antitrust law by illegally maintaining its monopoly in personal computer operating systems. But it rejected breaking up the company as a remedy for the illegal acts.
The proposed settlement would require Microsoft to take steps to give computer makers more freedom to feature rival software on their machines and share parts of the inner workings of Windows with other software makers.
But the nine dissenting state attorneys general say the settlement is inadequate. They have asked Kollar-Kotelly to order Microsoft to sell a cheaper, stripped-down version of its Windows operating system and to give competitors access to the inner workings of the Internet Explorer browser.
In addition, the hold-out states want the judge to ensure that Microsoft Office, the popular business software, will be compatible with other software platforms.
Microsoft has told Kollar-Kotelly that the schedule "should be amended in view of the non-settling states' dramatic expansion of the scope of the litigation beyond what the court reasonably could have anticipated three months ago."
But the holdout states urged the judge, in a filing made a week ago, not to delay the remedy hearings, saying Microsoft had plenty of warning they would likely seek broad conduct remedies.
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