Government to Issue Final Proposal Today

BOSTON (05/26/2000) - The U.S. Department of Justice (DOJ) is due to file its final proposal for remedies today in the Microsoft Corp. antitrust case. A DOJ spokeswoman said that the proposal is likely to be filed in U.S. federal court early this afternoon.

U.S. District Court Judge Thomas Penfield Jackson on Wednesday rejected a Microsoft plea that the company be allowed more time to prepare a defense to the government's proposal to split the vendor in two. Jackson, who gave strong indications that he's all for splitting the company, also dismissed Microsoft's request for summary judgment, which asked the judge to immediately dismiss the breakup plan.

The DOJ and 17 state attorneys general who are plaintiffs in the historic case have said they want Jackson to order Microsoft be broken into one company that handles operating systems and another for all other software applications. The plaintiffs also are seeking behavioral remedies aimed at stopping Microsoft's anticompetitive business practices. Two other state attorneys general have recommended only behavioral remedies.

Microsoft is fighting any breakup plan and said that it will agree to immediate behavioral remedies if Jackson dismissed the government proposal to create two companies. Instead, Jackson indicated that he liked a friend-of-the-court brief filed by the Software & Information Industry Association (SIAA) and the Computer & Communications Industry Association (CCIA). This plan calls for breaking the company into three with one entity focused on operating systems, a second on Internet applications and a third on other applications.

Jackson abruptly ended the Wednesday oral arguments on the remedy proposals, asking the DOJ to submit by today a "clean copy" of its remedy proposal, including details from the hearing. He then gave Microsoft 48 hours from today to respond. With the U.S. Memorial Day holiday on Monday, court will be closed, so it is believed that the company has until Wednesday of next week to respond.

The DOJ's final proposal today, despite Jackson's comments about the friend-of-the-court brief Wednesday, is widely expected to include only minor changes. That could bode well for Microsoft stock, which took a hit yesterday, closing at US$61.50 per share, the lowest point in the last 52 weeks. In early Nasdaq trading this morning, shares were up slightly, trading at $62.68.

Details to follow after the DOJ submits its final proposal.

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