00-5212 U. S. Court of Appeals for District of Columbia. (PDF format)
The court concluded that Microsoft possesses monopoly power, but points out that this is a necessary but not a sufficient condition. Under U.S. law, the court must consider whether the monopolist's conduct, on balance, harms competition.
The court goes on to consider conduct under a number of headings:
1. Licences issued to Original Equipment Manufacturers (OEM's)
The court holds "that with the exception of the one restriction prohibiting automatically launched alternative interfaces, all the OEM license restrictions at issue represent uses of Microsoft ’s market power to protect its monopoly, unredeemed by any legitimate justification.The restrictions therefore violate §2 of the Sherman Act."2. Integration of the Internet Explorer (IE) and Windows
The court concludes that Microsoft may not be held liable for this aspect of product design.3. Agreements with Internet Access Providers
The court affirms the District Court's decision that these contracts are exclusionary devices and in violation of §2 of the Sherman Act.4. Dealings with Internet Content Providers (ICP), Independent Software Vendors (ISV), and Apple Computer.
The District Court had already found that there was not sufficient evidence that Microsoft's promotional restrictions actually had a substantial deleterious effect on the usage share of the Netscape Navigator.5. Java
The court reverses the District Court's imposition of a liability for Microsoft's development and promotion of its own version of Java.The court concluded that Microsoft's intentional deception of Java developers is exclusionary and violated §2 of the Sherman Act.
The court affirms that Microsoft's threats to Intel were exclusionary and contrary to §2 of the Sherman Act.
The court holds that the exclusive dealing arrangements with the ISV's violate §2 of the Sherman Act.
The court holds that exclusive deal with Apple is exclusionary, in violation of §2 of the Sherman Act.6. Course of Conduct
The court reverses the District Court's determination that Microsoft's general course of conduct was also contrary to §2 of the Sherman Act.On the issue of Attempted Monopolization, the District Court concluded that ‘‘the predatory course of conduct Microsoft has pursued since June of 1995 has revived the dangerous probability that Microsoft will attain monopoly power in a second market.’’ This is reversed by the Appeal Court, largely because the U.S. government failed to make its case.
On the issue of Tying, the District Court concluded that the bundling of IE with Windows was a contrary to §1 of the Sherman Act. The Appeal Court upheld the lower court's finding that Microsoft has the monopoly power "in the tying market". However, it remanded the larger issue and provided guidance to the lower court as to how it should consider the matter. The court must determine if Microsoft indeed price bundled —that is,was Microsoft ’s charge for windows and IE higher than its charge would have been for Windows alone?
The Appeal Court found that the lower court remedies were "nearly identical to the [U.S. Department of Justice] proposal. They were set aside for three reasons unconnected with the conduct of the lower court judge - see below. The Appeal Court said "On remand,the District Court,after affording the parties a proper opportunity to be heard,can fashion an appropriate remedy for Microsoft ’s antitrust violations." and provided some guidance as to the determination of remedies.
Judicial Misconduct
The Appeal Court found the District Court judge guilty of judicial
misconduct, primarily because the judge destroyed the appearance of partiality.
The judge's order with respect to remedies is set aside and remanded to
a different district court judge. The Appeal Court "will not set
aside the existing Findings of Fact or Conclusions of Law (except insofar
as specific findings are clearly erroneous or legal conclusions are incorrect)."
Further, the court said "Although Microsoft challenged very few of the findings as clearly erroneous,we have carefully reviewed the entire record and discern no basis to suppose that actual bias infected his factual findings. The most serious judicial misconduct occurred near or during the remedial stage."
cjw
26-Jul-01