Microsoft Asks Judge to Reject States' Sanctions Plan

Microsoft Corp. Wednesday asked a federal judge to dismiss the stringent antitrust sanctions that some state attorneys general want to impose on it, saying the states are trying to "displace" the Justice Department's decision to settle the case.

Trying to bolster its legal argument before the start of remedy proceedings against the company, Microsoft told the judge that the nine states still pursuing the case are overstepping their authority by proposing sanctions that go beyond the Justice Department's settlement deal.

"Under well-settled legal and constitutional principles, the non-settling states are limited to seeking redress for state-specific injuries caused by Microsoft's conduct," Microsoft said in its brief. "They cannot displace the United States in its role of establishing national competition policy."

The legal maneuvering comes about two weeks before U.S. District Judge Colleen Kollar-Kotelly is scheduled to convene hearings on what sanctions are needed to remedy Microsoft's antitrust violations.

Microsoft reached a deal with the Justice Department in November to settle the long-running case by, among other things, agreeing to give computer makers more freedom to feature rivals' software on the machines they sell.

Nine of the 18 states in the lawsuit agreed to sign on to the deal, but nine others are pressing ahead and asking Kollar-Kotelly to impose stricter sanctions.

The dissenting states, which include California, Massachusetts and Iowa, say their remedies would close a series of loopholes in the Justice Department settlement. It also would force Microsoft to sell a cheaper, stripped-down version of its monopoly Windows operating system and disclose the inner workings of Windows.

Microsoft has criticized the states' proposal as radical and harmful to consumers.

In a landmark ruling on the case in June, a federal appeals court dismissed parts of the government's case, but upheld a lower court's conclusion that Microsoft had used illegal tactics to maintain the Windows monopoly.

Kollar-Kotelly has scheduled hearings next week to determine whether the Justice Department settlement is in the public interest; the following week she will start separate remedy proceedings.

The dissenting states "seek to establish themselves as national antitrust policymakers," Microsoft said in its brief. Their proposal "effectively would dictate how Microsoft conducts its business in all 50 states. This they cannot do."