UNITED STATES OF AMERICA, Plaintiff,
v.
MICROSOFT CORPORATION, Defendant.
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Civil Action No. 98-1232 (CKK)
Remaining in this case for the Court’s determination is the resolution of a single issue: whether entry of the final judgment proposed by the parties is in the public interest. The Court makes this determination pursuant to the Antitrust Procedures and Penalties Act (“Tunney Act”), 15 U.S.C. 16(b)-(h). In a previous Memorandum Opinion, the Court reviewed the pertinent procedural history and determined that the parties had satisfied the other requirements of the Tunney Act. See generally United States v. Microsoft Corp., No. 98-1232, slip op. (D.D.C. July
1, 2002). Having reviewed the voluminous record in this case and considered the factors enumerated in 15 U.S.C. 16(e), the Court finds that, with the exception of the provisions relating to the retention of the Court’s jurisdiction, the proposed consent decree is in the public interest. Accordingly, the Court conditionally approves the proposed consent decree as the final judgment in this case, pending the prompt agreement by the parties to a modification of the Court’s retention of its jurisdiction.
I. PROCEDURAL HISTORY
On May 18, 1998, the United States filed a civil complaint alleging that Microsoft had engaged in anticompetitive conduct in violation of 1 and 2 of the Sherman Act, 15 U.S.C. 1, 2. On that same date, a group of state plaintiffs filed a separate civil complaint alleging similar violations of federal law, as well as violations of the corresponding provisions of their various state laws. Not long after filing, the two cases were consolidated and thereafter, proceeded jointly through discovery and a trial on the merits. On November 5, 1999, Judge Thomas Penfield Jackson entered 412 findings of fact, United States v. Microsoft Corp., 84 F. Supp. 2d 9 (D.D.C.
1999) (hereinafter cited as “Findings of Fact”), and on April 3, 2000, Judge Jackson entered conclusions of law, finding Microsoft liable for violations of 1 and 2 of the Sherman Act and the corresponding state law provisions, United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000). On June 7, 2000, Judge Jackson entered final judgment in the consolidated cases and imposed a structural remedy of divestiture for Microsoft’s violations of the Sherman Act.
United States v. Microsoft Corp., 97 F. Supp. 2d 59 (D.D.C. 2000).
Microsoft appealed, and the United States Court of Appeals for the District of Columbia Circuit determined to consider the appeals in the consolidated cases en banc. Following extensive briefing and two days of oral argument, the appellate court issued a unanimous per curiam opinion affirming in part, reversing in part, vacating the remedy decree in full, and remanding in part for remedy proceedings before a different district court judge. See United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc). Following reassignment, on September 28, 2001, this Court ordered that the parties enter into intensive settlement negotiations. United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28,
1In the former companion case, State of New York, et al. v. Microsoft Corp., the States of New York, Ohio, Illinois, Kentucky, Louisiana, Maryland, Michigan, North Carolina, and Wisconsin have entered into a conditional settlement with Microsoft as to the issue of remedy.
Those Plaintiff States-”Settling States”-are awaiting approval by this Court of the settlement in this case before entry of the settlement in State of New York, et al v. Microsoft Corp. pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Because the proposed final judgment addresses the Settling States as well as the United States in its terms, the Court, where appropriate, refers to both the United States and the Settling States as “Plaintiffs” in this Memorandum Opinion.
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2001) (setting a schedule for settlement discussions). On that same date, the Court entered a schedule for discovery and commencement of evidentiary proceedings, in the event that the cases were not resolved through settlement. United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28, 2001) (setting discovery guidelines and schedule).
The United States and Microsoft were able to reach a resolution in United States v.
Microsoft Corp., No. 98-1232 (D.D.C.), in the form of a proposed consent decree, filed with the Court as the “Revised Proposed Final Judgment” on November 6, 2001. As a result, the Court vacated the discovery schedule with regard to United States v. Microsoft Corp. and deconsolidated that case from its companion case, State of New York, et. al. v. Microsoft Corp., No. 98-1233 (D.D.C.). United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Nov. 2, 2001) (vacating the Sept. 28, 2001, Scheduling Order with regard to Civil Action No. 98-1232); United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (Feb. 1, 2002) (deconsolidating cases). Rather than proceed to an evidentiary hearing on the issue of remedy along with some of the plaintiffs in State of New York, et. al. v. Microsoft Corp.,1 the United States and Microsoft commenced the process of obtaining judicial approval of the proposed consent decree pursuant to the Tunney Act, 15 U.S.C. 16(b)-(h). The November 6, 2001, filing of the Revised Proposed Final Judgment (“RPFJ”) was
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accompanied by a “Stipulation” entered into by the United States, Microsoft, and the Settling States. The Stipulation provided that the Court could enter the proposed final judgment “at any time after compliance with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, and without further notice to any party or other proceedings.” Stipulation and Revised Proposed Final Judgment at 1. The United States filed its “competitive impact statement” (“CIS”) with the Court on November 15, 2001. Pursuant to 15 U.S.C. 16(b), the United States published the proposed final judgment, along with the CIS, in the Federal Register on November 28, 2001. Revised Proposed Final Judgment and Competitive Impact Statement, 66
Fed. Reg. 59,452 (Nov. 28, 2001). On December 10, 2001, Defendant Microsoft filed with the Court its “description of . . . written or oral communications by or on behalf of [Microsoft] . . . with any officer or employee of the United States concerning or relevant to” the proposed consent decree. Thereafter, Microsoft supplemented this description on March 20, 2002.
The United States received 32,392 comments on the proposed final judgment and
provided the full text of these comments to the Court on February 28, 2002. On March 1, 2002, the United States submitted the full text of the public’s comments for publication in the Federal Register, and on May 3, 2002, the public comments appeared in the Federal Register pursuant to that submission. United States’ Certificate of Compliance at 4; Public Comments, 67 Fed. Reg. 23,654 (Books 2-12) (May 3, 2002). On May 9, 2002, the United States published in the Federal
Register an “addendum containing the correct text of thirteen (13) comments for which either an incomplete or incorrect electronic version had been included in the original submission to the Federal Register.” Addendum to Public Comments, 67 Fed. Reg. 31,373 (May 9, 2002); United States Certificate of Compliance at 4. The United States certified compliance with 15 U.S.C. 16 2Pursuant to the stipulation filed with the Court on November 6, 2001, Microsoft began complying with portions of the proposed final judgment on December 16, 2001, as if “it were in
full force and effect.” Stipulation at 2. On August 28, 2002, the United States submitted a “Notice” to the Court advising “the Court of Microsoft’s compliance with various milestones established by the Second Revised Proposed Final Judgment (‘SRPFJ’).” Notice at 1 (Aug. 28, 2002). In general terms, the Notice indicates that Microsoft is in compliance with its requirements and “takes seriously its obligations under the SRPFJ.” Id. at 7.
(b)-(d) on May 9, 2002. On July 1, 2002, this Court confirmed the applicability of the Tunney Act to these proceedings and found that the parties had complied with the Act’s requirements such that the matter was ripe for the Court’s determination of the public interest. See United States v. Microsoft Corp., No. 98-1232, slip op. (D.D.C. July 1, 2002).
II. TUNNEY ACT
A. Tunney Act Concerned with the appearance of impropriety engendered by the secrecy of consent decree negotiations in antitrust cases, in addition to exposing to “sunlight” the process by which such consent decrees are negotiated, 119 Cong. Rec. at 24599, Congress determined that the judiciary should do more than merely “rubber stamp” proposed consent decrees in antitrust cases, H. Rep. No. 93-1463, at 8 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6536; S. Rep. No. 93-
298, at 5 (1973). See also United States v. Microsoft Corp., 56 F.3d 1448, 1458 (D.C. Cir. 1995) (quoting legislative history). Accordingly, 16(e) of Title 15 mandates that, prior to the entry of a consent judgment proposed by the United States in an antitrust action, the district court must determine that “entry of such judgment is in the public interest.” 15 U.S.C. 16(e). Subsection (e) specifically requires the Court to “make an independent determination as to whether or not
entry of a proposed consent decree is in the public interest.” S. Rep. 93-298, at 5; Microsoft, 56 F.3d at 1458 (quoting legislative history).
“The court’s role in protecting the public interest is one of ensuring that the government has not breached its duty to the public in consenting to the decree.” United States v. Bechtel, 648 F.2d 660, 666 (9th Cir. 1981). In making this determination, the Court “may consider” the following:
(1) the competitive impact of such judgment, including termination of alleged
violations, provisions for enforcement and modification, duration or relief sought,
anticipated effects of alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) the impact of entry of such judgment upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint including
consideration of the public benefit, if any, to be derived from a determination of the
issues at trial. 15 U.S.C. 16(e). The D.C. Circuit characterized these considerations more simply as an inquiry into the “purpose, meaning, and efficacy of the decree.” Microsoft, 56 F.3d at 1462. The D.C. Circuit identified a number of issues to which the district court should pay particularly close attention in its examination of the decree and corresponding assessment of the public interest. “A district judge pondering a proposed consent decree . . . should pay special attention to the decree’s clarity,” as it is the district judge who must “preside over the
implementation of the decree.” Id. at 1461-62. Based on a similar rationale, district courts are expected to “pay close attention” to the enforcement provisions in a proposed consent decree. Id. at 1462. Where there exist third-party claims that entry of the proposed decree will cause affirmative harm, the district court should at least pause or “hesitate” in order to consider these claims before reaching a conclusion that the proposed decree is appropriate. Id. Notwithstanding the district court’s focused consideration of these and other issues, the Court must recall that its “authority to review the [proposed] decree depends entirely on the
government’s exercising its prosecutorial discretion by bringing a case in the first place.” Id. at 1459-60. Accordingly, the Court must accord deference to the “government’s predictions as to the effect of the proposed remedies.” United States v. Thomson Corp., 949 F. Supp. 907, 914 (D.D.C. 1996) (quoting Microsoft, 56 F.3d at 1461); see also United States v. Western Elec. Co., 900 F.2d 283, 297 (D.C. Cir. 1990) (”[A]lthough we see no doctrinal basis for the district court to
November 1, 2002
_____________________________
COLLEEN KOLLAR-KOTELLY
United States District Judge