Microsoft break-up ruling overturnedgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Thursday, 28 June, 2001, 18:25 GMT 19:25 UK
Microsoft break-up ruling overturned
A US appeals court has overturned a ruling that software giant Microsoft must be broken up.
In a damning indictment of the trial judge, the court said the earlier ruling had been "tainted" by the judge's actions and it rejected his conclusion that the software giant must be broken up.
However, it agreed in part with the lower court's finding that Microsoft had engaged in illegal anti-competitive behaviour.
The case will now be sent back to a lower court to be reconsidered by a different judge.
In a statement, the US Justice Department said it was "pleased" the appeals court had agreed that Microsoft had acted as an illegal monopoly.
Microsoft said it would wait to digest the ruling before commenting.
News of the court ruling caused a surge in US stock markets.
At 1742 GMT, the Dow Jones industrial average was up 184 points at 10,619. The Nasdaq composite was up 68 points at 2,142.
Trading in Microsoft shares on the Nasdaq was halted after the court's decision.
The shares last stood at $74.96, up $3.82 or 5.37% on the day.
'Serious judicial misconduct'
A seven-strong panel at the US District Court of Appeals for the District of Colombia had heard arguments at a two-day hearing in February.
In June last year, Judge Thomas Penfield Jackson found Microsoft to be guilty of abusing monopoly powers and ordered Microsoft to be split in two.
Judge Thomas Penfield Jackson: "Tainted" On Thursday, the federal appeals court said: "Although we find no evidence of actual bias [in the earlier ruling], we hold that the actions of the trial judge seriously tainted the proceedings before the District Court and called into question the integrity of the judicial process."
The court said Judge Jackson was guilty of "serious judicial misconduct" in making derogatory comments about Microsoft.
It said this "would give a reasonable, informed observer cause to question his impartiality in ordering the company split in two".
The decision to reverse Judge Jackson's ruling was unanimous, by a 7-0 vote.
The court said the case should now be reconsidered by a different judge.
In their ruling, the appeal court judges agreed in part with the lower court that Microsoft had acted illegally.
They said the company had improperly monopolised the computer operating system market.
But they reversed the finding that packaging the Internet Explorer browser with the Windows operating system had violated anti-trust laws.
They also said a third violation cited the lower court should be judged under a different standard.
Legal experts had predicted that the break-up order would be overturned on appeal but that Microsoft would still face restrictions on its business conduct.
In the February appeal, Microsoft alleged that Judge Jackson had been biased against Microsoft. The company cited reports where he had compared Microsoft executives to children and Bill Gates to Napoleon.
The US Justice Department - which had brought the case with 17 states - countered that the Judge's decision had been prompted by the clear evidence that Microsoft was abusing its position.
The US Department of Justice had originally hoped to put the appeal process on a fast-track by sending the case straight to the Supreme Court - the country's highest legal authority.
The Supreme Court said the case should be heard by a lower court first
Government lawyers had argued that any delay would give Microsoft valuable time to consolidate its dominant position in the market.
The Supreme Court however ruled that the software giant's appeal should first be heard by a lower court.
This lower court was expected to be more sympathetic to Microsoft, as it had previously ruled in Microsoft's favour in a different but similar case.
-- PHO (firstname.lastname@example.org), June 28, 2001