Massachusetts investigating Microsoft settlement

The attorney general for Massachusetts is investigating possible violations by Microsoft of its November 2002 antitrust settlement with the U.S. government and a number of states.

In a status report submitted by the state in District Court for the District of Columbia and made public Monday, Massachusetts Attorney General Tom Reilly said that the state is following up on complaints and tips about “several issues” that may be violation of the antitrust settlement.

The status report listed five possible infractions, each of which was tied to a complaint or tip about the activities of the Redmond, Wash., software giant, the report said.

Among other things, Massachusetts will look into whether Microsoft retaliated against an OEM for promoting the rival Linux operating system and entered into agreements with an ISP that limit competition in the middleware market, it said.

Microsoft spokesman Jim Desler called Massachusetts allegations “vague and meritless” and said that Microsoft is complying fully with all aspects of the final settlement.

In the report, Massachusetts said that it is being hampered in its efforts to pursue investigations of Microsoft by agreements between the U.S. Department of Justice and the states that have settled. These agreements prohibit the states that have settled from joining in investigative work with Massachusetts, according to the report.

The state is denied access to leads sent to the enforcers for the other states and barred from accessing information about Microsoft’s compliance efforts that is available to the other states, the report said.

“The exclusion of Massachusetts has been effective and complete,” it said.

Reilly’s office also complained in the report that Microsoft did not respond to a May request by the court to provide plaintiffs in the antitrust suit with information on the company’s compliance efforts.

Requests for information submitted by Massachusetts to the compliance officers on Microsoft’s Technical Committee went unanswered and the committee is apparently without offices or phone numbers, the report said.

However, Microsoft did furnish the Massachusetts attorney general’s office with the requested material by fax and e-mail, and the technical committee does have phones and offices and is being supported by Microsoft in compliance with the settlement decree, Desler said.

Massachusetts is the only state that participated in the antitrust suit that is still appealing the government’s settlement with Microsoft, after West Virginia settled its dispute with the company in June.

Microsoft has recently been critical of Massachusetts’ continued opposition to the terms of the settlement, saying Massachusetts proposed remedies would benefit its competitors at a cost to consumers.

Denied access to information used by the other litigating states, Massachusetts will attempt to gather information on violations itself, the report said. The state will set up a Web site to collect complaints, and will monitor its telephone hotline for Microsoft-related complaints. In addition, the state will gather information from industry groups and the press about Microsoft’s conduct, the report said.

Massachusetts’ report comes amid growing dissatisfaction with Microsoft’s efforts to comply with the November 2002 antitrust settlement.

On Friday, the Justice Department and the states involved in the case issued a joint status report that expressed “concern” about the royalty rates and terms Microsoft proposed in return for access to its communications protocols.

Calling the licensing program “complex” and “unprecedented,” Desler acknowledged that some changes may be necessary, Desler said.

“We realize and welcome industry feedback and the government’s feedback. We made changes (to the licensing program) and are open to making additional changes that we hope will improve the program,” he said.

Massachusetts actions aside, Microsoft’s compliance is being measured by what Desler termed “legitimate enforcement authorities” such as the courts, the Justice Department, states and Microsoft’s board of directors.

It will now be up to U.S. District Judge Colleen Kollar-Kotelly to review the reports by Massachusetts and the other states, according to Bob Schneider, an attorney at Chapman and Cutler LLP in Chicago.

If Kollar-Kotelly decides that there is merit to the complaint and that a serious violation of the antitrust agreement has taken place, she could hold Microsoft in contempt, Schneider said.