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IN THE UNITED STATES DISTRICT COURT
ENTRY OF THE PROPOSED FINAL JUDGMENT
APPENDIX B: UNITED STATES v. MICROSOFT CORP. — NEWSPAPER NOTICE APPENDIX C: DECLARATION OF DAVID S. SIBLEY
Prior Decisions in This Case Microsoft Corp. v. United States, 122 S. Ct. 350 (2001) (Denying Certiorari) Microsoft Corp. v. United States, 530 U.S. 1301 (2000) (Declining to Accept Appeal) United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc) (per curiam) (Appellate Decision) United States v. Microsoft Corp., 2001 WL 931170 (D.C. Cir. Aug. 17, 2001) (en banc) (per curiam) (Denying Stay of Mandate) United States v. Microsoft Corp., 97 F. Supp. 2d 59 (D.D.C. 2000) (Initial Final Judgment) United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (Conclusions of Law) United States v. Microsoft Corp., 84 F. Supp. 2d 9 (D.D.C. 1999) (Findings of Fact) Cases Adams v. Bell, 711 F.2d 161 (D.C. Cir. 1983) American Can Co. v. Mansukhani, 814 F.2d 421 (7th Cir. 1987) American Water Works Ass'n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1974) Andrx Pharms., Inc. v. Biovail Corp. Int'l, 256 F.3d 799 (D.C. Cir. 2001), petition for certiorari filed, 70 U.S.L.W. 3465 (Jan. 11, 2002), (No. 01-1050) Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129 (1967) Commissioner v. Lundy, 516 U.S. 235 (1996) Fifth & Walnut, Inc. v. Loew's Inc., 176 F.2d 587 (2d Cir. 1949) Ford Motor Co, v. United States, 405 U.S. 562 (1972) Gustafson v. Alloyd Co., 513 U.S. 561 (1995) Hartford-Empire Co. v. United States, 323 U.S. 386 (1945) Hyperlaw, Inc. v. United States, 1998 WL 388807, 159 F.3d 636 (D.C. Cir. 1998) (unpublished table decision) In re IBM Corp., 687 F.2d 591 (2d Cir. 1982) International Salt Co. v. United States, 332 U.S. 392 (1947) Janus Films, Inc. v. Miller, 801 F.2d 578 (2d Cir. 1986) Local No. 93, International Association of Firefighters v. City of Cleveland, 478 U.S. 501 (1986) Maryland v. United States, 460 U.S. 1001 (1983) Massachusetts School of Law at Andover, Inc. v. United States, 118 F.3d 776 (D.C. Cir. 1997) Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206 (1998) Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992) Sorenson v. Secretary of Treasury, 475 U.S. 851, 860 (1986) South Dakota v. Yankton Sioux Tribe, 522 U.S. 329 (1998) Sullivan v. Stroop, 496 U.S. 478 (1990) United States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982), aff'd mem. sub. nom. Maryland v. United States, 460 U.S. 1001 (1983) United States v. Alex. Brown & Sons, 963 F. Supp. 235 (S.D.N.Y. 1997), aff'd sub nom. United States v. Bleznak, 153 F.3d 16 (2d Cir. 1998) United States v. Alex. Brown & Sons, 169 F.R.D. 532 (S.D.N.Y. 1996), aff'd sub nom. United States v. Bleznak, 153 F.3d 16 (2d Cir. 1998) United States v. Armour & Co., 402 U.S. 673 (1971) United States v. Automatic Data Processing, Inc., 1996-1 Trade Cas. (CCH) ¶ 71,361 (D.D.C. 1996) United States v. Bechtel Corp., 648 F.2d 660 (9th Cir. 1981) United States v. Blackstone Capital Partners II Merchant Banking Fund, 1999-1 Trade Cas. (CCH) ¶ 72,484 (D.D.C. 1999) United States v. Borden Corp., 347 U.S. 514 (1954) United States v. Central Contracting Co., 537 F. Supp. 571 (E.D. Va. 1982) United States v. City of Miami, 614 F.2d 1322 (5th Cir. 1980) United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316 (1961) United States v. Enova Corp., 107 F. Supp. 2d 10 (D.D.C. 2000) United States v. Figgie International Inc., 1997-1 Trade Cas. (CCH) ¶ 71,766 (D.D.C. 1997) United States v. Foodmaker, Inc., 1996-2 Trade Cas. (CCH) ¶ 71,555 (D.D.C. 1996) United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975) United States v. Grinnell Corp., 384 U.S. 563 United States v. Input/Output, Inc., 1999-1 Trade Cas. (CCH) ¶ 72,528 (D.D.C. 1999) United States v. Mahle GmbH, 1997-2 Trade Cas. (CCH) ¶ 71,868 (D.D.C.1997) United States v. Microsoft Corp., 56 F.3d 1448 (D.C. Cir. 1995) United States v. National Lead Co., 332 U.S. 319 (1947) United States v. Oregon State Medical Society, 343 U.S. 326 (1952) United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948) United States v. RCA, 46 F. Supp. 654 (D. Del. 1942), appeal dismissed, 318 U.S. 796 (1943) United States v. Swift & Co., 286 U.S. 106 (1932) United States v. Loewen Group Inc., 1998-1 Trade Cas. (CCH) ¶ 72,151 (D.D.C. 1998) United States v. Titan Wheel International, Inc., 1996-1 Trade Cas. (CCH) ¶ 71,406 (D.D.C. 1996) United States v. Trump, 1988-1 Trade Cas. (CCH) ¶ 67,968 (D.D.C. 1988) United States v. United Artists Theatre Circuit, Inc., 1971 Trade Cas. (CCH) ¶ 73,751 (E.D.N.Y. 1971) United States v. United Shoe Machinery Corp., 391 U.S. 244 United States v. Western Elec. Co., 900 F.2d 283 (D.C. Cir. 1990) United States v. Western Elec. Co., 993 F.2d 1572 (D.C. Cir. 1993) Utah Public Service Commission v. El Paso Natural Gas Co., 395 U.S. 464 (1969) Statutes and Rules Sherman Act, 15 U.S.C. § 1 Sherman Act, 15 U.S.C. § 2 Clayton Act, § 5(a), 15 U.S.C. § 16(a) Clayton Act, ch. 323, § 5, 38 Stat. 730, 731 (1914) Tunney Act (Antitrust Procedures and Penalties Act, § 2), 15 U.S.C. § 16(b)-(h) 15 U.S.C. § 16(b) 15 U.S.C. § 16(c) 15 U.S.C. § 16(d) 15 U.S.C. § 16(e) 15 U.S.C. § 16(f) 15 U.S.C. § 12(a) 15 U.S.C. § 18a(g) 15 U.S.C. § 21(l) Expediting Act, 15 U.S.C. § 29(b) 28 U.S.C.§ 455(a) Fed. R. Civ. P. 41(a)(1)(ii) Legislative Materials 119 Cong. Rec. 3452 (1973) 119 Cong. Rec. 24,600 (1973) 119 Cong. Rec. 24,604 (1973) The Antitrust Procedures & Penalties Act: Hearings on S. 782 & S. 1088 Before the Subcomm. on Antitrust & Monopoly of the Senate Committee on the Judiciary, 93d Cong. (1973) Consent Decree Bills: Hearings on H.R. 9203, H.R. 9947, and S. 782 Before the Subcomm. on Monopolies & Commercial Law of the House Comm. on the Judiciary, 93rd Cong. (1973) H.R. Rep. No. 93-1463 (1974), reprinted in 1974 U.S.C.C.A.N. 6535 S. Rep. No. 93-298 (1973) Miscellaneous 47 Fed. Reg. 21,214 (1982) 59 Fed. Reg. 59,426 (1994) 66 Fed. Reg. 59,452 (2001) 3 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law (rev. ed. 1996) Maimon Schwarzschild, Public Law by Private Bargain: Title VII Consent Decrees and the Fairness of Negotiated Institutional Reform, 1984 Duke L.J. 887, 903 (1984) Note, The Scope of Judicial Review of Consent Decrees under the Antitrust Procedures and Penalties Act of 1974, 82 Mich. L. Rev. 153 (1974) Webster's Third International Dictionary (1981)
IN THE UNITED STATES DISTRICT COURT
ENTRY OF THE PROPOSED FINAL JUDGMENT
The proposed final judgment, as revised and modified, represents the culmination of six years of investigation, litigation, appeals, and negotiation. It is a comprehensive remedy that puts into place meaningful, effective, and enforceable restrictions on Microsoft and, critically, comports with both the legal standards for relief in an antitrust case and the decision by the Court of Appeals in this case. Just as important, it provides relief effective now. Failure to enter the proposed final judgment would mean that Microsoft's anticompetitive practices likely would continue unabated for several more years, an eternity in this ever-changing market. Accordingly, in the United States' best judgment, entry of the proposed final judgment is in the public interest.
1. On May 18, 1998, the United States filed a civil complaint alleging that Microsoft had engaged in anticompetitive conduct in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. At Microsoft's request, the case was consolidated with a similar action brought by twenty(1) states and the District of Columbia.(2) The United States and the States jointly presented the case in a 78-day bench trial that began on October 19, 1998, and ended on June 24, 1999. The court heard testimony from 26 witnesses and admitted depositions of 79 other witnesses and 2733 exhibits. On November 5, 1999, the court entered 412 findings of fact. United States v. Microsoft Corp., 84 F. Supp. 2d 9 (D.D.C. 1999) ("Findings of Fact"). On April 3, 2000, after the parties attempted unsuccessfully to settle the suit through months-long mediation before Judge Richard Posner,(3) the district court entered its conclusions of law. 87 F. Supp. 2d 30 (D.D.C.2000) ("Conclusions of Law"). On June 7, 2000, after further proceedings on remedy, the district court entered its final judgment. 97 F. Supp. 2d 59 (D.D.C. 2000) ("Initial Final Judgment" (IFJ)). Plaintiffs never contended that Microsoft unlawfully obtained its monopoly in Intel-compatible personal computer (PC) operating systems. Plaintiffs alleged, and the district court ruled, that Microsoft successfully had engaged in anticompetitive acts to protect and maintain that monopoly, in violation of Section 2 of the Sherman Act. Conclusions of Law at 37-44. The district court also ruled that Microsoft had attempted to monopolize the Internet Web browser market, in violation of Section 2, and had tied its Web browser, Internet Explorer (IE), to its Windows operating system, in violation of Section 1. Id. at 45-51. The district court rejected plaintiffs' claim that Microsoft's exclusive dealing contracts violated Section 1 of the Sherman Act. Id. at 51-54. To remedy the violations, the court ordered Microsoft to break up into separate operating system and applications businesses. Initial Final Judgment, 97 F. Supp. 2d at 64-65. The Initial Final Judgment also ordered transitional conduct restrictions until the structural relief became effective. Id. at 66-69. Microsoft filed notices of appeal,(4) and the Court of Appeals, sua sponte, ordered that any proceedings before it be heard en banc. Order, No. 00-5212 (D.C. Cir., June 13, 2000). The district court certified the case for direct appeal to the Supreme Court pursuant to the Expediting Act of 1903, as amended, 15 U.S.C. § 29(b), and stayed its judgment pending completion of the appellate process. Order (June 20, 2000). The Supreme Court declined to accept the appeal and remanded the case to the Court of Appeals. Microsoft Corp. v. United States, 530 U.S. 1301 (2000). 2. After extensive briefing and two days of oral argument, the en banc Court of Appeals issued a unanimous and comprehensive decision affirming in part, reversing in part, and remanding in part for proceedings before a different district judge. United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc) (per curiam) ("Microsoft"). a. The Court of Appeals affirmed the district court's ruling that Microsoft maintained its operating system monopoly, in violation of Section 2 of the Sherman Act, by engaging in specific acts that impeded the emergence of two nascent "middleware" threats to that monopoly. Id. at 50-80.(5) "Middleware" is platform software that runs on top of an operating system but simultaneously exposes its own application programming interfaces (APIs) so that applications can run on the middleware itself. Id. at 53; Findings of Fact, ¶ 28. An application written to rely exclusively on a middleware program's APIs could run on all operating systems on which that middleware runs (i.e., would be "cross-platform"). The Court of Appeals found that middleware posed a potential threat to Microsoft's operating system monopoly because if enough applications developers (known as independent software vendors (ISVs)) wrote enough applications for widely used middleware, computer users no longer would be reluctant to choose a non-Windows operating system for fear that it would run an insufficient array of applications. Microsoft, 253 F.3d at 53. Over time, this widely used middleware might have the potential to erode the "applications barrier to entry" that protected Microsoft's Windows monopoly. Microsoft's anticompetitive acts centered on two particular middleware threats: Netscape's Web browser (Navigator), and Sun Microsystem's Java technologies. Microsoft set out to ensure that its own Web browser, IE, gained dominant usage so that ISVs would continue to focus their efforts on the Windows platform rather than the Navigator platform. Microsoft took steps to constrict Netscape's access to the distribution channels that led most efficiently to browser usage: pre-installation by computer manufacturers (known as original equipment manufacturers (OEMs)), distribution by Internet access providers (IAPs), and the ISVs themselves. Through restrictions placed in its Windows licenses to OEMs, exclusive deals with IAPs and ISVs, and a combination of inducements to — and threats of retaliation against — other third-parties, Microsoft sought to impede the emergence of middleware as a potential threat to its operating system monopoly. Id. at 58-74. Java technologies posed a middleware threat to Microsoft by enabling developers to write programs that could be ported to different operating systems with relative ease. In May 1995, Netscape announced that it would include a Sun-compliant Windows Java Virtual Machine (JVM), a key component of Java technologies, with every copy of Navigator, thereby creating the possibility that Sun's Java implementation would achieve the necessary ubiquity on Windows to pose a threat to the applications barrier to entry. Id. at 74. Thus, by limiting the usage of Navigator, Microsoft simultaneously would limit the distribution of Java. Microsoft, however, took additional steps directed specifically to interfere with the development, distribution, and use of cross-platform Java. Those steps included: (1) pressuring third parties not to support cross-platform Java (id. at 75); (2) seeking to extinguish the Java threat through technological means that maximized the difficulty with which applications written in Java could be ported from Windows to other platforms, and vice versa (id. at 74-75); and (3) other anticompetitive steps to discourage developers from creating Java applications compatible with non-Microsoft JVMs (id. at 75-78). In affirming liability for monopoly maintenance, however, the Court of Appeals upheld 12 of the 20 district court findings that particular acts constituted bases for violations of Section 2. See id. at 59-78. In particular, the court rejected the findings that Microsoft had violated Section 2 by prohibiting OEMs from "automatically launching a substitute user interface upon completion of the boot process" (id. at 63); overriding the user's choice of browser in certain circumstances (id. at 67); giving away its Internet Explorer browser to IAPs and ISVs (id. at 67-68, 71-72); offering IAPs a bounty for each customer the IAP signs up for service using the IE browser (id. at 67-68); developing and giving away the Internet Explorer Access Kit (IEAK) (id. at 68); entering into exclusive agreements with Internet Content Providers (ICPs) (id. at 71); and creating a JVM that runs faster on Windows but lacks the cross-platform attributes that Sun's (hence Navigator's) JVM possesses (id. at 74-75). In addition, and importantly, the Court of Appeals expressly rejected the district court's conclusion that, "apart from Microsoft's specific acts, Microsoft was liable under § 2 based upon its general 'course of conduct.'" Id. at 78. The court found that the district court had failed to "point to any series of acts, each of which harms competition only slightly but the cumulative effect of which is significant enough to form an independent basis for liability." Id. b. The Court of Appeals also reversed the district court's determination that Microsoft had attempted to monopolize the Web browser market in violation of Section 2. Id. at 80-84. The court found that plaintiffs had failed to define and prove a market for Web browsers, a necessary element of the claim. Id. at 81-82. c. The Court of Appeals vacated the district court's judgment on the Section 1 tying claim as well, and remanded that claim to the district court for reconsideration under the rule of reason. Id. at 84-97. In so holding, the Court of Appeals held that the market for platform software presented unique issues under tying law. The "nature of the platform software market affirmatively suggests that per se rules might stunt valuable innovation" (1) because "the separate-products test is a poor proxy for net efficiency from newly integrated products"; and (2) "because of the pervasively innovative character of platform software markets, tying in such markets may produce efficiencies that courts have not previously encountered and thus the Supreme Court had not factored into the per se rule as originally conceived." Id. at 92-93. The court directed that on remand, plaintiffs would be limited to proving that the anticompetitive effects from tying outweigh the benefits in the tied product market, not just that those effects outweigh the benefits overall. Id. at 95. In addition, plaintiffs would be "precluded from arguing any theory of harm that depends on a precise definition of browsers or barriers to entry . . . other than what may be implicit in Microsoft's tying arrangement." Id. d. In light of its determination that it had "drastically" (id. at 105, 107) altered the district court's conclusions on liability, and its finding that an evidentiary hearing on remedy was necessary prior to the district court's imposting a remedy (id. at 101-103), the Court of Appeals vacated the final judgment and remanded the case to the district court for further proceedings. Id. at 107. The court also offered guidance "to advance the ultimate resolution of this important controversy." Id. at 105. Though recognizing that, "[a]s a general matter, a district court is afforded broad discretion to enter that relief it calculates will best remedy the conduct it has found to be unlawful," id., the Court of Appeals directed this Court to "reconsider whether the use of the structural remedy of divestiture is appropriate with respect to Microsoft, which argues that it is a unitary company." Id. Critically, the Court of Appeals admonished the district court on remand to bear in mind the role of causation when fashioning relief, directing this Court to "consider whether plaintiffs have established a sufficient causal connection between Microsoft's anticompetitive conduct and its dominant position in the [operating system] market." Id. at 106. Absent "clear[]" indication of a "'significant causal connection between the conduct and creation or maintenance of the market power,'" Microsoft's unlawful behavior "should be remedied by 'an injunction against continuation of that conduct.'" Id. at 106 (quoting 3 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 650a, at 67 (rev. ed. 1996) ("Antitrust Law")) (emphasis added by Court of Appeals). The court emphasized that it had "found a causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market only through inference," id. at 106-07, but that even the district court "expressly did not adopt the position that Microsoft would have lost its position in the [operating system] market but for its anticompetitive behavior." Id. at 107 (quoting Findings of Fact, ¶ 411) (emphasis added). The court concluded that the remedy should be "tailored to fit the wrong creating the occasion for the remedy." Id. at 107. e. Finally, the Court of Appeals concluded that the district judge's contacts with the press violated the Code of Conduct for United States Judges and warranted disqualification under 28 U.S.C.§ 455(a). Id. at 107-118. The court vacated the remedy on the additional basis that the district judge's misconduct infected the remedial phase. Id. at 117. 3. After the Court of Appeals rejected Microsoft's petition for rehearing, Microsoft filed a petition for a writ of certiorari based on the Court of Appeals' failure to vacate the Findings of Fact and Conclusions of Law — and not just the remedy — in light of the district judge's misconduct. Petition for a Writ of Certiorari, No. 01-236 (Aug. 7, 2001) ("Cert. Petition"). Although Microsoft's petition was limited to the issue of judicial misconduct, it promised a future petition on several issues relating to liability when the case becomes final — after the remand to the district court and another appeal to the D.C. Circuit. Id. at 15. On October 9, 2001, the Supreme Court denied Microsoft's petition. Microsoft Corp. v. United States, 122 S. Ct. 350 (2001). Meanwhile, on the same day it filed its petition for certiorari, Microsoft moved the Court of Appeals to stay its mandate pending disposition of the petition by the Supreme Court. The Court of Appeals denied Microsoft's motion, United States v. Microsoft Corp., 2001 WL 931170 (D.C. Cir. Aug. 17, 2001) (en banc) (per curiam), and issued its mandate on August 24, 2001. That same day, a random selection assigned the case to this Court. 4. On September 6, 2001, plaintiffs advised Microsoft that they did not intend to pursue the Section 1 tying claim on remand, and that they did not intend to pursue on remand the restructuring of Microsoft into two separate companies. As explained to the Court in the Joint Status Report filed on September 20, 2001, Plaintiffs' goal was to achieve the expeditious imposition of relief that would effectively remedy Microsoft's illegal conduct. Joint Status Report at 21 (Sept. 20, 2001). 5. On September 28, 2001, this Court ordered the parties to "concentrate all of their resources" on a new round of intense settlement negotiations and probable mediation. Order at 2-3 (Sept. 28, 2001). The Court emphasized the importance of these efforts in light of the passage of time — more than six years since plaintiffs' claims arose and more than four years of litigation, id. at 2. The Court expressly directed plaintiffs to "determine which portions of the former judgment remain appropriate in light of the appellate court's ruling and which portions are unsupported following the appellate court's narrowing of liability." Tr. 9/28/01 at 8. The Court also adopted a fast-track discovery and evidentiary hearing schedule in case the parties failed to settle.(6) On November 2, 2001, following five weeks of intensive negotiation and mediation as ordered by the Court, the United States and Microsoft agreed on terms of a proposed final judgment. Stipulation at 1 (Nov. 2, 2001). Further negotiations with several of the plaintiff States resulted in submission on November 6, 2001, by the United States, the Settling States,(7) and Microsoft of the Revised Proposed Final Judgment (RPFJ). Pursuant to the requirements of Section 2 of the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. §§ 16(b)-(h), the United States filed its Competitive Impact Statement (CIS) on November 15, 2001, and published the RPFJ, CIS, and description of the procedures for submitting public comments on the proposed decree in the Federal Register on November 28, 2001. 66 Fed. Reg. 59,452 (2001). The public comment period closed on January 28, 2002 — with more than 30,000 comments submitted — and the United States' response to those comments is being filed concurrently with this Motion and supporting Memorandum. Under the Tunney Act, this Court must now determine whether the RPFJ is in the "public interest." 15 U.S.C. § 16(e). 6. On January 30, 2002, the Court ordered the parties to address "whether, in response to the comments received by the Department of Justice in accordance with 15 U.S.C. § 16(b), the United States and Microsoft are considering any modifications of the Proposed Final Judgment." Order at 1 (Jan. 30, 2002). Responding in a Joint Status Report filed on February 7, 2002, the parties stated that they were considering making modifications and would submit any proposed modifications to the Court on or before February 27, 2002. Joint Status Report at 7 (Feb. 7, 2002). Simultaneously with this Memorandum, the parties have filed a Second Revised Proposed Final Judgment (SRPFJ), which includes modifications to which the United States, Microsoft, and the Settling States have agreed.(8) This Memorandum is couched in terms of, and generally refers to, the proposed decree before modification (i.e., the RPFJ), addressing the modifications of the SRPFJ only as required. However, the decree the Court should enter is the modified version of the RPFJ — that is, the SRPFJ.
By its express terms, the Tunney Act applies to "[a]ny proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws," 15 U.S.C. § 16(b) (emphasis added), without regard to when the United States submits it. Moreover, the Court is required to make its Tunney Act public interest determination "[b]efore entering any consent judgment proposed by the United States under this section." Id. § 16(e) (emphasis added). The Revised Proposed Final Judgment on its face is a proposal for a consent judgment submitted by the United States for entry in a civil proceeding brought by the United States under the antitrust laws. By the plain and unambiguous statutory language, the Tunney Act applies and governs the Court's consideration of the RPFJ. The Tunney Act applies even though the parties proposed the RPFJ after trial and after the Court of Appeals affirmed Microsoft's liability for monopoly maintenance. These circumstances(9) have led some to suggest, see AAI Tunney Act Comments, at 4-9 (MTC # 0030600); ProComp's Comments to the Proposed Final Judgment, at 1-2 (MTC # 0030608) ("ProComp Comments"); Memorandum of Points and Authorities in Support of the California Plaintiffs' Motion to Intervene at 18-21 (Jan. 23, 2002)) ("Cal. Plaintiffs' Br.")), that the Tunney Act does not apply to some proposals for consent judgments submitted by the United States for entry in a civil proceeding brought by the United States under the antitrust laws, including the RPFJ, because of the stage at which they are proposed. It has been variously suggested that the Act does not apply to proposals that arise after the taking of testimony begins (id. at 10, 18-19 n.9); after litigation to judgment (id. at 11, 18), apparently whether or not that judgment is vacated on appeal; and after litigation through judgment and appeal (id. at 18), again apparently without regard to the result on appeal. Because, then and now, most consent judgments in government antitrust cases are entered before trial, Congress undoubtedly focused on pre-trial consent judgments when it enacted the Tunney Act. But Congress knew that consent judgments could be proposed at later stages, see pages 15-16 below, and it did not exempt them from the Tunney Act. Even if Congress had failed to foresee later-arising proposals, in the face of an "unambiguous statutory text [such a failure] is irrelevant," Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206, 212 (1998), because application of an unambiguous statute "in situations not expressly anticipated by Congress" merely shows the statute's breadth. Id. (citation and internal quotation marks omitted). The plain meaning of "[a]ny proposal for a consent judgment" is sufficient to support the conclusion that the Tunney Act applies here. But if one wants more support for reading "any" to mean "any," that support is readily at hand. First, nothing in the language of the Tunney Act suggests that the Act reaches only proposals for consent judgments in government civil antitrust cases that are submitted at some appropriate time.(10) And the context of the Tunney Act suggests a broad reading of the statute's coverage — at the very least, a reading not limited to consent judgments before testimony is taken.(11) The term "Tunney Act" refers to Sections 5(b)-(h) of the Clayton Act. Section 5(a), originally enacted in 1914 as Section 5, gives prima facie evidence effect to certain consent decrees, subject to the proviso that the section does not give that effect to "consent judgments or decrees entered before any testimony has been taken." 15 U.S.C. § 16(a). If Congress in 1914 had understood the words "consent judgments or decrees" to refer only to ones entered before any testimony had been taken, there would have been no need to draw the distinction, and the proviso would have been surplusage.(12) See South Dakota v. Yankton Sioux Tribe, 522 U.S. 329, 347 (1998) ("the Court avoids interpreting statutes in a way that 'renders some words altogether redundant'") (quoting Gustafson v. Alloyd Co., 513 U.S. 561, 574 (1995)). Had Congress used the term "consent judgment" in Section 5(b) of the Clayton Act to mean something different than its meaning in Section 5(a), it surely would have said so. See Commissioner v. Lundy, 516 U.S. 235, 250 (1996) ("the normal rule of statutory construction [is] that identical words used in different parts of the same act are intended to have the same meaning") (quoting Sullivan v. Stroop, 496 U.S. 478, 484 (1990), and Sorenson v. Secretary of Treasury, 475 U.S. 851, 860 (1986) (internal quotation marks omitted)). Second, Congress clearly was aware that consent judgments could arise relatively late in the course of an antitrust case. Not only were there examples ready at hand involving well-known antitrust cases, see, e.g., Fifth & Walnut, Inc. v. Loew's Inc., 176 F.2d 587, 592-93 (2d Cir. 1949) (consent decrees with some defendants entered on remand, after Supreme Court affirmed liability in part and reversed in part in United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948)),(13) but the legislative history contained prominent references to the possibility. Representative Hutchinson, then the ranking minority member of the House Judiciary Committee and of its Monopolies and Commercial Law subcommittee, inserted into the hearing record a statement plainly recognizing that circumstances arising during prosecution of a case might make settlement seem appropriate.(14) And Thomas Kauper, then Assistant Attorney General-Antitrust Division, specifically noted in his testimony that "a consent decree . . . may come after trial." The Antitrust Procedures & Penalties Act: Hearings on S. 782 & S. 1088 Before the Subcomm. on Antitrust & Monopoly of the Senate Committee on the Judiciary, 93d Cong. 117 (1973) ("Senate Hearings") (testimony of Thomas E. Kauper). Finally, a reading of the statutory language that precludes its application at this stage would lead to anomalous results. Nothing plausibly explains why Congress would want a court to enter consent judgments in the later stages of government civil antitrust cases without following Tunney Act procedures — publication of the decree and CIS, a public comment period, and so forth. Nor is it plausible that Congress intended, sub silentio, to prohibit courts from entering consent judgments at certain stages of the litigation. Courts have long entered consent judgments reached after the taking of evidence, after determinations of liability, and even after affirmance of liability by the Supreme Court, as the Paramount Pictures history just cited demonstrates. Moreover, the Supreme Court has expressly acknowledged the authority of the Attorney General to settle cases at any stage. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 136 (1967) (Court does "not question the authority of the Attorney General to settle suits after, as well as before, they reach here"). We do not, of course, suggest that this Court approach its public interest determination in this proceeding as if the RPFJ had been filed simultaneously with the complaint. The trial record, Findings of Fact, Conclusions of Law, and appellate decisions in this case all exist, and the Tunney Act does not require the Court to ignore them. But as we discuss below, see pages 39-42, the history of this case does not change the nature of the Court's public interest determination; it changes only the circumstances in and to which that standard is applied.
With the filing today of the public comments and the government's responses, the United States has completed all of the steps required of it before the Court enters a proposed consent judgment under the Tunney Act, 15 U.S.C. §§ 16(b)-(d), except for the publication of those comments and responses. We expect to publish as required, in the manner described below in Section II.F, and we will promptly notify the Court when we have done so. The United States will then have complied completely with the requirements of the Act.(15)
On November 6, 2001, the United States (together with the Settling States and Microsoft) submitted to the Court the Revised Proposed Final Judgment. The United States filed its Competitive Impact Statement with the Court on November 15, 2001, and published the RPFJ and CIS in the Federal Register on November 28, 2001 (66 Fed. Reg. 59,452), as required by 15 U.S.C. § 16(b);(16) see also Order at 2-3 (Nov. 8, 2001) ("Nov. 8 Order"). The CIS included each of the six required recitals, see 15 U.S.C. §§ 16(b)(1)-(6),(17) as well as other material. Copies of the RPFJ and CIS were made available to the public at the Court's website.(18) The United States also made them available at the Department of Justice website. Because there were no "materials and documents which the United States considered determinative in formulating" the proposed judgment ("determinative documents"), 15 U.S.C. § 16(b), the United States was not required to make copies of such documents available at the Court.(19) The United States furnished copies of the CIS to those who requested them.(20) As required by 15 U.S.C. § 16(c) and the Court's Order of November 8, 2001, the United States published in the Washington Post (November 16 22, 2001), the San Jose Mercury News (November 17 23, 2001), and the New York Times (November 17 23, 2001) a notice complying with the requirements of that statutory provision and the Order.(21) On November 28, 2001, the United States published procedures for submitting comments on the RPFJ. 66 Fed. Reg. 59,452 (2001). The 60-day public comment period (see 15 U.S.C. § 16(d)), began the same day and ended on January 28, 2002.(22) During that period, the United States received over 30,000 public comments. See Joint Status Report 3-4 (Feb. 7, 2002). The United States is filing those comments and its response to them, see 15 U.S.C. §§ 16(b), (d),(23) simultaneously with the filing of this Memorandum. The United States believes that it will have completed all Tunney Act procedural requirements when it publishes the public comments and its response to these comments in the manner described below in Section II.F. The United States will notify the Court when publication occurs.
The CIS filed by the United States in this case fully satisfies all Tunney Act requirements. In enacting the Tunney Act, Congress sought, among other things, "to encourage additional comment and response by providing more adequate notice [concerning a proposed consent judgment] to the public," S. Rep. No. 93-298, at 5 (1973) ("Senate Report"); H.R. Rep. No. 93-1463, at 7 (1974) ("House Report"), reprinted in 1974 U.S.C.C.A.N. 6535, 6538; the CIS is the primary means by which Congress sought to do so. Introducing his bill, Senator Tunney explained that the six items of information required in a CIS would "explain to the public[,] particularly those members of the public with a direct interest in the proceeding, the basic data about the decree to enable such persons to understand what is happening and make informed comments o[r] objections to the proposed decree during the 60-day period." 119 Cong. Rec. 3452 (1973) (remarks of Sen. Tunney) ("Tunney Remarks").(24) The purpose could be achieved, Senator Tunney suggested, without adding greatly to the government's workload because the six prescribed items "do not require considerably more information than the complaint, answer and consent decree themselves would provide and, therefore, would not be burdensome requirements." Senate Hearings at 3 (statement of Sen. Tunney) ("Tunney Statement"). The CIS in this case succeeded beyond all expectations in achieving the congressional goal.(25) As noted above, over 30,000 public comments were submitted, a number apparently beyond the wildest imaginings of the Tunney Act's sponsor in 1973, see House Hearings at 45 (testimony of Sen. Tunney) (predicting that "in the typical case, you will have [no public comments], but perhaps you will have 10 to 15 in a highly controversial case"). Indeed, the number of comments received on the RPFJ exceed the number received in the AT&T case by more than an order of magnitude, see United States v. AT&T, 552 F. Supp. 131, 135 (D.D.C. 1982) ("over six hundred comments"), aff'd mem. sub. nom. Maryland v. United States, 460 U.S. 1001 (1983); 47 Fed. Reg. 21,214, 21,214-24 (1982) (listing name and address of each commentor on proposed AT&T decree, with length of comment in pages).(26) Although many of the comments received are unlikely to contribute new insights concerning the RPFJ,(27) approximately 2,900 — a number nearly five times the total number of comments in AT&T — contain "a degree of detailed substance concerning the RPFJ." Joint Status Report at 4 (Feb. 7, 2002). Although the Court has only just received the full set of comments, the United States provided the Court with an advance installment of 47 of the most extensive comments on February 14, 2002. The Court therefore is aware already of substantial evidence that the public did not lack the raw material for formulating "informed comments o[r] objections to the proposed decree" (Tunney Remarks, 119 Cong. Rec. at 3452). Having established that the CIS in this case richly fulfilled the statutory purpose, we turn to whether its content met the formal requirements of the statute. In addressing that question, we proceed through the six recitals the statute specifies, and then address additional aspects of CIS content. As the statute requires, the CIS "recite[s]":
Section I of the CIS, CIS at 2, describes the nature and purpose of the proceeding, as the statute requires. 15 U.S.C. § 16(b)(1). We are aware of no suggestion that this description is inadequate or otherwise fails to satisfy the statutory requirement.
Section III of the CIS, CIS at 5-17, describes the practices giving rise to Microsoft's antitrust violation.(28) We are aware of no suggestion that this recital is inadequate or otherwise fails to satisfy the statutory requirement.
Section IV of the CIS, CIS 17-60, the bulk of the document, explains the proposed consent judgment, provision by provision, in considerable detail. Subsection B, CIS 24-60, links the underlying theory of violation in the case ("[c]ompetition was injured in this case principally because Microsoft's illegal conduct maintained the applications barrier to entry . . . by thwarting the success of middleware that would have assisted competing operating systems"), id. at 24, to the primary remedial approach adopted ("the key to the proper remedy in this case is to end Microsoft's restrictions on potentially threatening middleware [and] prevent it from hampering similar nascent threats in the future" and thereby "restore the competitive conditions created by similar middleware threats"). Id. The remainder of the subsection explains how particular provisions contribute to this remedial strategy, and therefore to the anticipated competitive effect of the proposed judgment. See, e.g., id. at 33 (explaining role of required interface disclosures in overall remedial strategy and remedial impact). Although, as commentors point out, e.g., Comments of the Progress & Freedom Foundation on the Revised Proposed Final Judgment and the Competitive Impact Statement, 16-17 (MTC # 0030606) ("P&FF Comment"), the 40-plus-page analysis offered in the CIS is less elaborated and detailed than might be required by Executive Order for a cost/benefit analysis of a major executive branch regulatory analysis, that is irrelevant because the analysis plainly satisfies the requirements of the Tunney Act. The CIS meets the statutory requirement and provides "the basic data about the decree to enable [members of the public] to understand what is happening and make informed comments o[r] objections to the proposed decree." Tunney Remarks, 119 Cong. Rec. at 3452.(29) There has been no sign that any alleged inadequacy handicapped potential commentors. P&FF, for example, was able to reach its conclusion — with which we disagree — that the RPFJ is not an adequate remedy despite these alleged inadequacies of the CIS. The Court will have ample information to conclude that entry of the decree is in the public interest.(30)
Section 6 of the CIS, CIS at 63, identifies the remedies available to private plaintiffs, with concise reference to damage actions under the federal antitrust laws, which may provide some private plaintiffs with a remedy.(31) The proposed judgment does not itself provide any remedy that can be invoked by potential private plaintiffs who may have been damaged by violations alleged in this case, and so the CIS does not refer to any such remedy. The description complies with the terms of the statute, and there is no ground for requiring more. It has been suggested that the CIS should go into more details with respect to private remedies and, specifically,(32) that it should address any impact the RPFJ might have on the collateral estoppel effect of the findings of fact and the conclusions of law in this case, and on the prima facie evidence effect of a final judgment under the Clayton Act, see 15 U.S.C. § 16(a). But nothing in the language of the Tunney Act requires the United States to offer, in the CIS or elsewhere, its views about legal questions that may arise in subsequent litigation.(33) The Tunney Act does not direct the United States to discuss the effect of the proposed judgment on private litigation; rather, it requires only a recital of the remedies available to private plaintiffs. The evidentiary or collateral estoppel effect of determinations this Court makes is a question to be addressed by the courts in which future litigants might seek to use those determinations. See AT&T, 552 F. Supp. at 211 (declining to "enter any specific decision or finding regarding" applicability of prima facie evidence aspect of § 16(a) because "the ultimate decision with respect to this issue must rest with the court in which such litigation may be brought"); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979) (granting trial courts broad discretion to determine whether offensive collateral estoppel should be applied in matters before them). It is not a question for this Court or for the United States to determine. The United States does not seek to inject itself into private litigation by making public statements in other forums, and its views with respect to matters contested in such cases carry no determinative legal effect.
Section VII of the CIS, CIS at 63-65, notes that the United States may withdraw its consent to the RPFJ prior to its entry and informs the public of procedures for submitting written comments regarding the RPFJ. That describes the procedure available for modifying the proposal prior to entry of the judgment, as required. The section then describes, briefly, the procedure for modifying the judgment after entry. We are aware of no suggestion that this description is inadequate or otherwise fails to satisfy the statutory requirement.
Section V of the CIS, CIS at 60-63, describes alternatives the United States considered and rejected,(34) and indicates the reasons why they were rejected. It explains why we viewed the RPFJ as a superior alternative to continued litigation. See id. at 60-61. It describes why, following remand, the United States decided not to continue to seek a break-up of Microsoft, a remedy that would have required further litigation and delay and would likely not have been achieved. See id. at 61; see also pages 63-65 below. The CIS explains the reasons for differences between the interim conduct provisions of the Initial Final Judgment (vacated by the Court of Appeals) and the provisions of the RPFJ. See id. at 61-62; see also pages 66-70 below. And it lists a number of other remedy proposals, the criteria used to evaluate them, and the results of that evaluation. Id. at 63. To be sure, the description and the evaluations of alternatives presented are brief.(35) But they are consistent with Senator Tunney's purpose of providing "basic data about the decree to enable [members of the public with a direct interest] to understand what is happening and make informed comments o[r] objections to the proposed decree," Tunney Remarks, 119 Cong. Rec. at 3452, and with his understanding that the statutory requirements would not be burdensome. See Tunney Statement, Senate Hearings at 3. Indeed, the sheer volume and comprehensiveness of the comments received suggest that the level of detail was more than adequate to stimulate informed public comment about the proposed remedy and about the relative merits of alternative remedies. A commentor contends, in separate litigation, that the CIS is inadequate because it "failed to explain adequately how alternative remedies (those not being pursued in the [R]PFJ) would have affected competition in the marketplace." AAI, Complaint ¶ 19. See also P&FF Comment, at 15 (criticizing CIS for failing to evaluate likely impacts on competition of alternative remedies). The Tunney Act, however, does not require any explanation of how alternative remedies would have affected competition in the marketplace. That is no accident. The version of Senator Tunney's bill reported out of the Senate Committee would indeed have required that CIS recitations include "the anticipated effects on competition of such alternatives." Senate Report at 9 (proposed 15 U.S.C. § 16(b)(6)). But on the Senate floor, Senator Hruska offered an amendment to strike that requirement, stating:
There is no reason . . . to require the staff of the Antitrust Division . . . to make a public prediction as to the competitive effects of various alternatives which it has considered. It is sufficient if the various alternatives are disclosed to the court and to the public. 119 Cong. Rec. 24,604 (1973).(36) Senator Tunney agreed with the amendment's "basic intent," and the Senate adopted it by voice vote. Id.
Several commentors contend that the CIS is inadequate because it contains material beyond that required by the statute and the additional material is incorrect or insufficient. That some commentors wish that the CIS contained more or different material, even though not required by statute, provides no basis for concluding that the CIS is deficient. Thus, Section VIII, CIS at 65-68, provides a brief discussion of the standards courts apply in determining whether entry of a proposed consent judgment is in the public interest. Intended to provide general information to the public, cf. pages 35-46 below (more substantial discussion of legal standard intended for the Court), Section VIII has been the target of several commentors. E.g., Comments of Software & Information Industry Association on Proposed Final Judgment, at 11 (MTC # 0030614) ("SIIA Comments") (contending that legal standard commentor finds in CIS is "simply the wrong standard of review for the remedy in this case"). The Court will determine the standard of review it will apply and, as discussed below, see pages 35-46, the appropriate standard of review corresponds to the standard expressed in the CIS. But because there is no requirement that the CIS discuss the standard of review at all, any alleged shortcomings of that discussion in the CIS are no basis for finding that the CIS fails to satisfy the statutory requirements. Similarly, the CIS contains two sentences explaining that the United States is not filing any determinative documents in this case because there are none within the meaning of the statute. CIS at 68. One commentor has alleged, in a separate lawsuit, that the CIS is deficient because the disclosure in this discussion is inadequate, AAI Complaint ¶ 27, and in particular because that discussion does not include our "definition or interpretation" of the word "determinative," id. ¶ 28. Because the CIS is not required to discuss determinative documents (and the statute does not require the United States to provide an interpretation or definition of the term "determinative"), this allegation provides no basis for concluding that the CIS fails to comply with the statute.
The United States did not file any determinative documents with the Court, see 15 U.S.C. § 16(b), did not otherwise make determinative documents available to the public, and did not list any determinative documents in the required newspaper notices, see id. § 16(c)(iii), for one simple reason: there are no such documents in this case. Moreover, although not required to do so, we stated as much in the CIS. See CIS at 68. Commentors have nevertheless, and without any basis, questioned our compliance. One commentor, without further explanation, suggests we failed to comply with the statute because "no documents considered determinative in formulating the RPFJ throughout the negotiation process were disclosed as required by 15 U.S.C. § 16(b)." Relpromax Comment, Ex. 11, at 3. As noted above, another, in a separate lawsuit, challenged our failure to provide a definition of "determinative" in the CIS, implying that under the commentor's preferred definition, there were in fact determinative documents. See Memorandum in Support of Motion for Preliminary Injunction and Expedited Hearing at 16-19 (Jan. 31, 2002), AAI. There are no "determinative" documents in this proceeding. The Court of Appeals addressed the definition of "determinative documents" in a recent Tunney Act case. See Mass. School of Law at Andover, Inc. v. United States, 118 F.3d 776 (D.C. Cir. 1997) ("MSL"). The United States had argued that the statute referred to documents "'that individually had a significant impact on the government's formulation of relief — i.e., on its decision to propose or accept a particular settlement.'" Id. at 784 (quoting brief of the United States). The court concluded that the statutory language "seems to point toward the government's view . . . and confines § 16(b) at the most to documents that are either 'smoking guns' or the exculpatory opposite." Id. The court added that "[t]he legislative history in fact supports the government's still narrower reading." Id. In this case, the United States did not consider any document to be a "smoking gun or its exculpatory opposite" with a significant impact on our formulation of our decision regarding the RPFJ, and so there were no determinative documents.(37)
As noted above, the United States published notices in three newspapers for the periods required by the Tunney Act and this Court's Order of November 8, 2001. The notice (the text of which is attached as Appendix B) contained "a summary of the terms of the proposal for the consent judgment" as required by 16 U.S.C. § 16(c)(i), and "a summary of the competitive impact statement" as required by 16 U.S.C. § 16(c)(ii).(38) Although required to do so by neither statute nor Order, the notice also stated where copies of the complaint, the RPFJ, and the CIS could be viewed and obtained and where comments could be sent. Because there were no determinative documents, the notice did not list them. See 15 U.S.C. § 16(c)(iii). The United States complied with the newspaper notice requirements of the Tunney Act, and no commentor has suggested otherwise.
The Tunney Act requires that the United States respond to public comments and file its response with the Court "[a]t the close of the period during which such comments may be received." 15 U.S.C. § 16(d). The statutory language allows the United States "some additional time after the end of [the comment period] to prepare and file responses," United States v. Bechtel Corp., 648 F.2d 660, 664 (9th Cir. 1981), and this Court allowed 30 days. Nov. 8 Order at 3. The comment period closed on January 28, 2002, and we are filing our responses with the Court, concurrently with this Memorandum, on February 27, 2002, thereby complying with the requirement.
In light of the Court's Memorandum and Order of February 22, 2002, denying as non-justiciable at that time the United States' Motion for Leave of Court to Adopt an Alternative Procedure for Comment Publication ("Alternative Procedure Motion"), the United States will pursue two parallel approaches to compliance with the remaining requirement of the Tunney Act, publication of the public comments and our response thereto in the Federal Register. Approach 1 will consist of the steps set forth in our Alternative Procedure Motion and the United States' Supplement to Prior Motion for Leave of Court to Adopt an Alternative Procedure for Comment Publication ("Supplement"), filed February 21, 2002, with one difference in timing. Even with the additional demands of simultaneously pursuing Approach 2, described below, the posting of the full text of the 32,329 public comments described in the Alternative Publication Motion(39) on the Department of Justice's website will likely be accomplished by March 4, 2002. We estimate that all of the other steps described in our Alternative Procedure Motion and Supplement will be completed by March 15, 2002. In the view of the United States, completion of these steps will constitute full, and certainly no less than substantial,(40) compliance with the statutory requirement that comments be published in the Federal Register, for the reasons set forth in our Alternative Procedure Motion and Supplement.(41) Approach 2, which we will pursue in addition to and simultaneous with Approach 1, consists of publication in the Federal Register of the full text of the public comments. We will begin the process of publication of the comments in their entirety by providing the full text to the Federal Register no later than March 1, 2002; the Federal Register will then commence its process of preparing the text for publication.(42) We estimate that publication of the full text of the comments in the Federal Register, if ultimately necessary, will occur approximately six weeks after submission to the Federal Register.
The Tunney Act does not require a new round of publication and comment in light of the SRPFJ. The publication and comment provisions of the Act serve "to enable the district court to make" its public interest determination. Hyperlaw, Inc. v. United States, 1998 WL 388807, at *3, 159 F.3d 636 (D.C. Cir. 1998) (unpublished table decision). Accordingly, a "court should treat notice and comment under the Tunney Act as analogous to agency rulemaking notice and comment." Id. (quotation marks omitted). Applying that analogy, "there is no need for successive rounds of notice and comment on each revision," provided the final decree "is a 'logical outgrowth' of the proposed decree. . . . Further notice and comment should be required only if it 'would provide the first opportunity for interested parties to offer comments that could persuade the agency to modify its [proposal].'" Id. (quoting American Water Works Ass'n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1974)). The proposed decree as modified is a logical outgrowth of the RPFJ and so requires no further notice and comment. As explained in the United States' Memorandum Regarding Modifications Contained in Second Revised Proposed Final Judgment, each of the modifications clarifies decree language in response to public comments on the RPFJ. They thus are in fact a natural outgrowth of the notice and comment process. Taken separately or together, the modifications do not fundamentally change the RPFJ. All contribute to the public interest. The purpose of the notice and comment has thus been well satisfied, and further notice and comment would merely delay the court's public interest determination without sound reason.(43)
Courts have long applied a public interest standard in determining whether to enter an antitrust consent decree. See, e.g., United States v. RCA, 46 F. Supp. 654, 655 (D. Del. 1942) (decision to enter a consent decree "involves a determination by the chancellor that it is equitable and in the public interest"), appeal dismissed, 318 U.S. 796 (1943). That standard is now embodied in the Tunney Act, 15 U.S.C. § 16(e) ("the court shall determine that the entry of such judgment is in the public interest" before entering it); see AT&T, 552 F. Supp. at 149 n.74 (Tunney Act "represents an endorsement of the line of cases in which courts examined proposed consent decrees to determine whether they were in the public interest"); House Report at 11, 1974 U.S.C.C.A.N. at 6542 ("Preservation of antitrust precedent, rather than innovation in the usage of the phrase, 'public interest,' is, therefore, unambiguous"). The court of appeals in United States v. Microsoft Corp., 56 F.3d 1448 (D.C. Cir. 1995) ("Microsoft I"), set forth the factors that a Tunney Act court's public interest determination entails. That inquiry differs fundamentally from the inquiry a court conducts in resolving, by adjudicated judgment, a dispute between the litigants before it. Regardless of the stage at which the parties resolved their disputes and reached a settlement in this case, the Court's task is to determine whether it would be in the public interest to enter that settlement as a judgment, not to devise its own remedy.
In determining whether the proposed decree is in the public interest,(44) a district court properly considers whether "the remedies [are] so inconsonant with the allegations charged as to fall outside of the 'reaches of the public interest.'" Microsoft I, 56 F.3d at 1461. In Microsoft I, and again in MSL, 118 F.3d at 783, the D.C. Circuit explained that this inquiry entails consideration of four specific factors:
The district court must examine the decree in light of the violations charged in the complaint and should withhold approval only [1] if any of the terms appear ambiguous, [2] if the enforcement mechanism is inadequate, [3] if third parties will be positively injured, or [4] if the decree otherwise makes "a mockery of judicial power." See [Microsoft I, 56 F.3d] at 1462. MSL, 118 F.3d at 783. The inquiry with respect to the first two factors, ambiguity and enforceability, is straightforward and governed by a reasonableness standard, not a search for perfection. As the Court of Appeals explained, "the district judge who must preside over the implementation of the decree is certainly entitled to insist on that degree of precision concerning the resolution of known issues as to make his task, in resolving subsequent disputes, reasonably manageable." Microsoft I, 56 F.3d at 1461-62. Similarly, the Court's consideration of the "compliance mechanisms," id. at 1462 — see also 15 U.S.C. § 16(e)(1) ("provisions for enforcement") — is addressed to real and foreseeable problems relating to "actual compliance." Microsoft I, 56 F.3d at 1462. The third factor a Tunney Act court properly considers is whether a decree would inflict "positive injury" on third parties, id. at 1461 n.9, 1462. In so doing, the Court must distinguish between positive injury and injury from a decree's "mere failure to secure better remedies for a third party" for whatever reason. MSL, 118 F.3d at 780. The Court "should not reject an otherwise adequate remedy simply because a third party claims it could be better treated." Microsoft I, 56 F.3d at 1461 n.9. The heart of a district court's public interest determination, however, is whether the proposed remedy adequately meets the requirements for an antitrust remedy, AT&T, 552 F. Supp. at 153, or instead whether "the discrepancy between the remedy and undisputed facts of antitrust violations could be such as to render the decree 'a mockery of judicial power,'" MSL, 118 F.3d at 782 (quoting Microsoft I, 53 F.3d at 1462). The requirements of an antitrust remedy are familiar. As the Court of Appeals noted in remanding this case:
a remedies decree in an antitrust case must seek to "unfetter a market from anticompetitive conduct, Ford Motor Co.[ v. United States], 405 U.S. [562, ] 577 [(1972)], to "terminate the illegal monopoly, deny to the defendant the fruits of its statutory violation, and ensure that there remain no practices likely to result in monopolization in the future," United States v. United Shoe Mach. Corp., 391 U.S. 244, 250 . . . (1968); see also United States v. Grinnell Corp., 384 U.S. 563, 577 . . . (1966). 253 F.3d at 103. As the Court of Appeals also emphasized, however, the "'[m]ere existence of an exclusionary act does not itself justify full feasible relief against the monopolist to create maximum competition.'" id. at 106 (quoting 3 Antitrust Law ¶ 650a, at 67). Thus, in Microsoft I, the Court of Appeals, while noting the familiar standard that an antitrust remedy should "pry open to competition a market that has been closed by defendants' illegal restraints," 56 F.3d at 1460 (quoting Int'l Salt Co. v. United States, 332 U.S. 392, 401 (1947)), clearly required that the scope of the appropriate remedy be related to the anticompetitive effects of the illegal conduct. Although an antitrust conduct remedy is not limited to enjoining precisely the conduct found to be unlawful, e.g., Hartford-Empire Co. v. United States, 323 U.S. 386, 409 (1945); AT&T, 522 F. Supp. at 150 n.80, nevertheless "the remedies must be of the 'same type or class' as the violations, and the court is not at liberty to enjoin 'all future violations of the antitrust laws, however, unrelated to the violations found by the court.'" Microsoft I, 56 F.3d at 1460.(45) This Court's assessment of the adequacy of the RPFJ also must take into account the risks and uncertainties of further litigation that would be required before there could be an adjudicated final judgment, safe from further challenge on appeal, that would remedy the anticompetitive harm attributable to conduct found to violate the Sherman Act. The Court of Appeals explained in Microsoft I that it is "inappropriate for the judge to measure the remedies in the decree as if they were fashioned after trial. Remedies which appear less than vigorous may well reflect an underlying weakness in the government's case, and for the district court to assume that the allegations in the complaint have been formally made out is quite unwarranted." Id. at 1461.(46) This case differs from Microsoft I in that there have been both findings of fact and conclusions of liability affirmed on appeal. But the difference is one of degree, not kind. Although the Court of Appeals in this case affirmed the district court's judgment of liability for monopolization, it emphasized that neither it, nor the district court, had so far found "a causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market," 253 F.3d at 106-07, sufficient to justify structural relief (although it did not rule out the possibility that this Court would find such a connection on remand). Absent such a causal connection, the court continued, only conduct relief is justified.(47) Id. at 106. Moreover, the Court of Appeals vacated the district court's judgment of liability with respect to tying, id. at 84 (leaving open the possibility of further litigation on remand using a more demanding standard); reversed as to attempted monopolization, id. at 80-84; and limited the scope of the conduct found to constitute illegal monopolization, id. at 67 (overriding of user's choice of default browser), 71 (deals with ICPs), 75 (development and promotion of a JVM), 78 (course of conduct considered separately). The remedy ultimately imposed on remand, the court directed, "should be tailored to fit the wrong creating the occasion for the remedy." Id. at 107. In the absence of a settlement, therefore, the United States would face the prospect of extended litigation with respect to the numerous issues related to relief in this case. An appeal likely would follow the conclusion of the proceedings in this Court. Microsoft also might choose to seek Supreme Court review of the Court of Appeals' decision affirming its liability for monopoly maintenance. See Cert. Petition at 15 (listing issues for future petition). Despite the Findings of Fact and Conclusions of Law, and despite the Court of Appeals' affirmance of a number of the holdings, including liability for monopolization, the ultimate outcome of continued litigation is uncertain, and the path of litigated remedy proceedings would be both risky and costly in terms of resources that might otherwise be devoted to other antitrust enforcement concerns.(48) Thus, although the litigation risks the United States faces here are not identical to the litigation risks it faces when it negotiates a settlement prior to trial, the teaching of Microsoft I remains applicable. This Court's evaluation of the RPFJ is properly informed by the public interest in a certain and timely remedy for Microsoft's unlawful conduct and must take account of the uncertainties and risks of further litigation, an inquiry that properly respects the realistic choices the United States faced in deciding to settle the case on the negotiated terms of the RPFJ. Moreover, in making its determination, the Court properly accords significant weight to the United States' predictive judgments as to the efficacy of remedial provisions. Indeed, such deference is proper even outside the consent decree context. See Ford Motor Co, v. United States, 405 U.S. 562, 575 (1972) ("'once the Government has successfully borne the considerable burden of establishing a violation of law, all doubts as to the remedy are to be resolved in its favor'") (quoting United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 334 (1961)). Similarly, it is proper to defer to the United States as representative of the public interest when the parties are requesting entry of an agreed-upon judgment.(49) As the Court of Appeals has explained, the degree of deference the trial court gives to "the government's predictions as to the effect of the proposed remedies" in a Tunney Act proceeding may vary with the extent of the court's familiarity with the market and other factors, Microsoft I, 56 F.3d at 1461. But, as the Court of Appeals also emphasized, even a court that has extensive relevant expertise should not lightly reject the government's predictions. For example, in the case of the AT&T decree — "a decree the oversight of which had been the business of a district judge for several years," Microsoft I at 1460 — the court of appeals instructed that the district judge should not reject an agreed-upon modification of the decree unless it had "'exceptional confidence that adverse antitrust consequences [would] result — perhaps akin to the confidence that would justify a court in overturning the predictive judgments of an administrative agency.'" Id. (quoting United States v. Western Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993)). Indeed, if courts do not give appropriate deference to the United States' views, Tunney Act proceedings will become equivalent to the proceedings that lead to adjudicated judgments with adjudicated remedies.
The fact of settlement here determines the Court's role in this proceeding and the inquiry it must make. Because the parties to this case have agreed to the Revised Proposed Final Judgment, the Court now faces a task that differs fundamentally from the task the Court of Appeals envisioned when it remanded United States v. Microsoft Corp.(50) The Court of Appeals anticipated the necessity of "a relief-specific evidentiary hearing," providing a basis for "judicial resolution" of factual issues in dispute between the United States and Microsoft — although it recognized that no such hearing would be required if the parties did not dispute the facts. Microsoft, 253 F.3d at 101. Moreover, anticipating continued litigation between the parties over issues related to relief, the Court of Appeals contemplated that this Court would exercise its "broad discretion to enter that relief it calculates will best remedy the conduct it has found to be unlawful," id. at 105, in light of its findings as to the causal connection between that conduct and the maintenance of Microsoft's market power, id. at 103-07. That is, the Court of Appeals envisioned that this lawsuit would terminate in an "adjudicated judgment," with the wording of that judgment "determined by the judge, who may draft it, accept the draft proposed by the winning party, or adopt portions of draft language proposed by any of the parties," Janus Films, Inc. v. Miller, 801 F.2d 578, 581-82 (2d Cir. 1986), to achieve the result the Court views as appropriate — subject to review on appeal. The parties, however, have chosen to forgo, at least conditionally, their rights to continue litigating to an adjudicated judgment, as well as their rights to further appellate review.(51) In order to achieve a prompt and certain resolution of this case (see CIS at 2, 60-61), they have chosen the alternative means of terminating litigation "by agreement of the parties," Janus Films, 801 F.2d at 581, a choice that is clearly permissible at this stage of the litigation. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 136 (1967) (government antitrust case in which the Supreme Court noted that it did "not question the authority of the Attorney General to settle suits after, as well as before, they reach here"); see also Fifth & Walnut, Inc. v. Loew's Inc., 176 F.2d 587, 592-93 (2d Cir. 1949) (consent decrees with some defendants entered on remand, while other defendants continued to litigate, after Supreme Court affirmed liability in part and reversed in part in United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948)).(52) In these circumstances, the parties themselves have resolved their differences, and the Court therefore does not have the classic judicial task of "[r]esolving contested disputes" of fact, law, and remedy. Maimon Schwarzschild, Public Law by Private Bargain: Title VII Consent Decrees and the Fairness of Negotiated Institutional Reform, 1984 Duke L.J. 887, 903 (1984). Rather, the Court's task is only to determine whether to perform the "judicial act," United States v. Swift & Co., 286 U.S. 106, 115 (1932), of entering the decree proposed by the parties for entry as the Court's decree. In cases involving only private interests, the decision to enter settling parties' agreements as judgments requires little judicial attention. See United States v. City of Miami, 614 F.2d 1322, 1330 (5th Cir. 1980) ("In what can be termed 'ordinary litigation,' that is, lawsuits brought by one private party against another private party that will not affect the rights of any other persons, settlement of the dispute is solely in the hands of the parties . . . . [T]he court need not and should not get involved"); Janus Films, 801 F.2d at 582 ("court normally has only a limited role so long as the dispute affects only private interests"). But in considering whether it "should enter a consent decree affecting the public interest," Adams v. Bell, 711 F.2d 161, 170 n.40 (D.C. Cir. 1983) (en banc), "[t]he court has a larger role." Janus Films, 801 F.2d at 582. Most fundamentally, the reason for that larger role is that a court of equity must avoid letting its decree become "an instrument of wrong" to the public. Swift, 286 U.S. at 115.(53) The Court's role in making a public interest determination differs from its role in formulating an adjudicated judgment. Because the Court "is evaluating a settlement, it is not as free to exercise its discretion in fashioning a remedy," AT&T, 552 F. Supp. at 151, as it would be in a case litigated to an adjudicated judgment. The Court is not "empowered to reject [the remedies sought] merely because [it] believe[s] other remedies [are] preferable." Microsoft I, 56 F.3d at 1460. In this procedural setting, the Court's "function is not to determine whether the resulting array of rights and liabilities 'is the one that will best serve society,' but only to confirm that the resulting settlement is '"within the reaches of the public interest."'" Id. (quoting United States v. Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990) (emphasis in original), in turn quoting Bechtel, 648 F.2d at 666, in turn quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)). This standard reflects not only the proper role of a court of equity asked to lend its authority to the parties' agreement, but also the critical role that consent decrees play in effective public antitrust enforcement. See Senate Report at 5 ("the consent decree is of crucial importance as an enforcement tool, since it permits the allocation of resources elsewhere"); 119 Cong. Rec. 24,600 (1973) (Statement of Sen. Gurney) (Tunney Act "is designed to enhance the value and effectiveness of the consent decree as a tool of public policy"). A consent decree, such as the RPFJ, is the product of negotiation. The parties weigh the benefits of prompt and certain resolution of the case against the possibility that continued litigation might improve their respective positions. Settlements potentially offer the public the benefits of more timely and certain relief, as well as significant savings in judicial and prosecutorial resources. But if courts refused to enter any consent decree that did not match precisely the relief the court would have imposed in the absence of a settlement, "defendants would have no incentive to consent to judgment and this element of compromise would be destroyed. The consent decree would thus as a practical matter be eliminated as an antitrust enforcement tool, despite Congress' directive that it be preserved." AT&T, 552 F. Supp. at 151. Thus, even in the AT&T case, a case of unparalleled public importance in which the trial court had unusual familiarity with both the evidence and the legal arguments of the parties, see id. at 152, the court determined to approve the parties' settlement "[i]f the [proposed] decree meets the requirements for an antitrust remedy." Id. at 153. The court made clear that it intended to follow that standard whether or not the proposed decree corresponded to the decree the court itself would have imposed had the parties pushed forward to an adjudicated judgment. See id. at 166 n.147 (noting that if the case "were to proceed to final judgment and liability were found, the Court might determine that [certain measures not part of the proposed decree] are appropriate remedies, either as alternatives to the divestiture of the Operating Companies or in addition to such divestiture").
The RPFJ is a sound and appropriate response to the violations found by the district court and affirmed by the court of appeals, recognizing, as it must, the substantial narrowing of the case that has taken place since its commencement in 1998. In fashioning appropriate relief, the United States was bound to confine its remedial proposals to the sole basis of liability sustained by the Court of Appeals — i.e., specific acts by Microsoft to impede the emergence of middleware as a threat to the operating system monopoly. The United States also was mindful of the risks associated with tampering too greatly with market mechanisms or seeking to dictate some preferred view of how these markets should develop. While Microsoft's violations must be redressed, the purpose of an antitrust decree is to restore and preserve competition, not to displace competition with a regulatory regime. The RPFJ meets the goals of public antitrust enforcement. First, it prohibits the conduct found by the court of appeals to be unlawful. The RPFJ contains specific affirmative prohibitions addressing each of the 12 practices the court determined to be acts of monopoly maintenance. This being a monopolization decree, the RPFJ then goes beyond the specific unlawful acts to provide fencing-in relief to address other practices that Microsoft might use to replicate the adverse effects of the offending conduct. For example, although there was no finding that Microsoft had priced its operating systems in an unlawful manner, the RPFJ requires uniform pricing and terms to the major OEM's to prevent retaliatory discrimination against those who might promote competing middleware products. Finally, the RPFJ takes affirmative steps to restore competition by creating favorable conditions under which competing middleware products can be developed and deployed. Among other things, the RPFJ requires the documentation and disclosure of applications interfaces and communications protocols to facilitate third-party development efforts and, in some instances, modifications of the operating system to accommodate competing middleware. Again, these restorative provisions go beyond the specific findings of unlawful behavior, with the goal of creating a forward-looking and comprehensive remedial scheme. Nothing in the RPFJ exempts Microsoft from the mandates of the antitrust laws; it continues to face antitrust exposure for conduct beyond that which has been litigated in this case. Many commentors, especially many of Microsoft's competitors, urge the Court to withhold Tunney Act approval, advocating their own views of the public interest. Although many such commentors assert that alternatives to the RPFJ might advance their own private strategic and financial interests, such proposals typically lack a foundation in the court's liability findings and likely would be harmful to both competition and consumers. The most persistent complaint is that the fencing-in and restorative provisions are not absolute prohibitions on competitive activity by Microsoft or absolute requirements that Microsoft surrender its technology for the benefit of competitors. Characterizing the RPFJ's limitations as "loopholes," these commentors fail to recognize that the limitations merely permit Microsoft to compete through actions that are not prohibited by the antitrust laws, were never at issue in this case, or were challenged under theories of liability expressly rejected by the court of appeals. Protecting competitors from legitimate competition from Microsoft is not a goal of public antitrust enforcement. The goal of the decree is not to secure specific advantages for particular competitors or to dictate for consumers which products or technologies will succeed. In fashioning the RPFJ, the United States has taken pains to remedy the violations without seeking to dictate market outcomes. We have had to balance certain competing interests, recognizing that provisions benefitting firms at one level in the chain of distribution have potential effects on firms at other levels. In striking such balances, the United States has remained faithful to the axiom that the U.S. antitrust laws protect competition not competitors. E.g., Andrx Pharms., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 812 (D.C. Cir. 2001) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977), petition for certiorari filed, 70 U.S.L.W. 3465 (Jan. 11, 2002), (No. 01-1050). On that basis, the United States has concluded that further fencing-in or restorative relief based upon hypothetical concerns about Microsoft's behavior not only would be unnecessary and unwarranted, but also might be affirmatively harmful to competition. Moreover, the RPFJ bears none of the infirmities that would justify the Court's withholding of approval. See MSL, 118 F.3d at 783 (listing factors that would justify withholding approval); Microsoft I, 56 F.3d at 1462 (same). The decree is comprehensive and complex, like the computer industry itself, but its terms are carefully defined and not ambiguous.(54) The enforcement mechanisms are creative and fully adequate. See pages 60-62 below.(55) No third party has demonstrated positive injury that would flow from entry of the RPFJ.
The Revised Proposed Final Judgment provides stringent, effective, enforceable, and immediate relief that fully comports with the purposes of relief in antitrust cases and with Microsoft's degree of liability as affirmed by the Court of Appeals. Restoring competition is the "key to the whole question of an antitrust remedy," United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 326 (1961). Competition was injured in this case principally because Microsoft's illegal conduct contributed to the applications barrier to entry into the personal computer operating system market by impeding the emergence of middleware products that had the potential to assist competing operating systems in gaining access to applications and other needed complements. Thus, the key to the proper remedy in this case is to end Microsoft's restrictions on potentially threatening middleware, prevent it from hampering similar nascent threats in the future, and restore competitive conditions like those that existed prior to the unlawful conduct. Moreover, in fashioning relief, the United States, as the public enforcer of the federal antitrust laws, must take care that the remedy not burden the economy or distort market outcomes through unnecessarily regulatory or otherwise inappropriate restraints. The RPFJ responds to these concerns; it imposes a series of requirements and carefully crafted prohibitions on Microsoft's conduct that are designed to accomplish the critical goals of an antitrust remedy without damaging the economy. See Sibley Decl. ¶¶ 86-90. As instructed by the Court of Appeals and this Court (see Tr. 9/28/01 at 8), the United States fashioned its relief by focusing on the specific practices for which Microsoft's liability was affirmed. Significantly, and quite properly, the RPFJ does not seek to eliminate Microsoft's operating system monopoly, see Sibley Decl. ¶ 8, though many commentors suggest it should. There was never any allegation — let alone any finding — in this case that Microsoft acquired its position in operating systems unlawfully. Further, the district court and the Court of Appeals both determined that they could not conclude that, absent Microsoft's illegal actions, any middleware product or products would have succeeded in toppling the monopoly. In fashioning the decree, the United States began with the district court's interim conduct remedies of June 2000. See Initial Final Judgment, 97 F. Supp. 2d at 66-69. As this Court recognized (Tr. 9/28/01 at 8), however, those remedies were based on a much wider range of liability findings than were affirmed on appeal. See Microsoft, 253 F.3d at 105 ("[t]his court has drastically altered the District Court's conclusions on liability"). Accordingly, the conduct restrictions of the Initial Final Judgment had to be tailored to the findings the Court of Appeals upheld. At the same time, however, because the interim conduct restrictions were designed to apply only as a stop-gap until the district court's structural remedy was implemented (Initial Final Judgment, 97 F. Supp. 2d at 66), they had to be broadened to address more fully the remedial objectives of arresting the anticompetitive conduct, preventing its recurrence, and restoring competitive conditions in the marketplace. No longer merely a stop-gap, the conduct restrictions now must stand on their own as full relief. In addition, the remedies needed to be updated to strengthen their long-term effectiveness in the face of the rapid technological innovation that continues to characterize the computer industry. The Court of Appeals noted that the six years that had elapsed between Microsoft's initial anticompetitive conduct and the appeal was an "eternity" in this market, Microsoft, 253 F.3d at 49 (quoted by Order at 2 (Sept. 28, 2001)), and the facts bear that out. When the complaint was filed in May 1998, Microsoft's then-current operating system was Windows 95. Shortly thereafter, Microsoft revised and updated the operating system with Windows 98, which fully integrated Internet Explorer into Windows. In October 2001, just after the case was remanded to this Court, Microsoft introduced the latest generation of its operating system, Windows XP. The remedy crafted now must be relevant in the new world of Windows XP, and beyond. The RPFJ accomplishes these objectives by fundamentally changing — for the ultimate benefit of consumers — the way Microsoft deals with OEMs, IAPs, ISVs, and others in the computer industry.
The Court of Appeals affirmed the district court's ruling that Microsoft unlawfully maintained its operating system monopoly through various actions designed to protect the operating system from the potential threat posed by middleware. However, the court reversed the district court's finding that Microsoft was liable based upon its general "course of conduct," and limited liability to twelve specific anticompetitive acts out of twenty found violative by the district court. The RPFJ provides consumers with prompt, certain, and effective relief by stopping each of the specific acts found unlawful by the Court of Appeals, preventing their recurrence, and restoring competitive conditions in the market.
Each of the twelve acts found unlawful by the Court of Appeals is listed below with a brief description of the specific provisions of the RPFJ that effectively address the conduct.(56)
Agreements with Computer Manufacturers (OEMs) |