Let the Microsoft peace talks begin

Microsoft and the DoJ sit down with mediator Richard Posner Tuesday. Here's how the process works -- and why you shouldn't expect a quick settlement.

Judge Richard Posner convenes representatives of Microsoft 19 states and the Justice Department on Tuesday to determine the chances of mediating an agreement in the company's landmark antitrust trial.

"Expectations should run low for this first meeting," said William Baer, who until recently headed the Bureau of Competition for the Federal Trade Commission. "This is likely to be preliminary and focused on establishing the rules of engagement." At the judge's request, neither side was willing to talk about the private meeting taking place in Chicago. Posner, chief judge of the U.S. Court of Appeals for the 7th Circuit, is acting in a private capacity.

Posner agreed to attempt to mediate the case at the request of U.S. District Court Judge Thomas Penfield Jackson in Washington, who is trying the case. Past attempts at mediation have gone nowhere and experts believed chances for a negotiated settlement were dim to none, until Posner stepped in. As his starting point, Posner will have Jackson's 207-page findings of fact issued earlier this month. Jackson found that Microsoft abused monopoly power with its Windows operating system, using it to harm consumers, rivals and other companies. Jackson has yet to conclude whether those actions violated the nation's antitrust laws, a decision that is expected in February after further written and oral arguments.

In the meantime, Posner may be able to help settle the case. Posner is an expert on economics and antitrust but he is no enemy of monopolies. But Posner has also written that a company's running room ends where the nation's antitrust laws begin. "One regulatory framework whose continued existence is explicitly presupposed by my analysis is ... the antitrust laws," Posner wrote in an essay that said monopolies should be freed from many forms of regulation.

No one knows what the two sides may agree on as a remedy. But neither the states nor the federal government have sought any fine or other financial settlement from Microsoft.

However, Microsoft faces a raft of consumer class action lawsuits that demand large amounts of money for overcharges that Jackson found had occurred. If there is a settlement, according to an antitrust expert who asked not to be identified by name, the citizens of states which settle might be deprived of their right to sue.

"The states can give up potential claims for money damages and in the process they will also be giving up the money damages claims of citizens within their states," said the lawyer. So if the 19 states in the case agree as part of a settlement to give up the right to sue for money damages, then their citizens are also barred from suing, the lawyer said. On the other hand, citizens of states other than the 19 involved would still be able to sue, the lawyer said.

"That's something the states involved will have to consider," the lawyer said.

Take me to the DoJ/Microsoft special .

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