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Microsoft settles Novell's antitrust claim


Microsoft yesterday announced that it would pay $536 million to software rival Novell to settle an antitrust case, and that it would pay a smaller, undisclosed sum to settle another antitrust claim from The Computer & Communications Industry Association (CCIA).

The Novell case

Microsoft was accused of using its monopoly position to disrupt sales of Novell's NetWare product. In addition to direct action, Novell supported the case brought by the US Government against Microsoft and was one of the companies whose complaints sparked the European Commission's investigation into Microsoft in 1998.

As part of the settlement deal announced yesterday, Novell will abandon its antitrust claims in the US in relation to NetWare and will stop participating in the European Commission's case.

In return, Microsoft will pay Novell $536 million and will also release its counterclaims in the NetWare case. The agreement does not oblige Microsoft to license or otherwise share any of its technology or intellectual property rights with Novell, nor does it include any admission of wrongdoing by Microsoft.

However, Novell intends to sue Microsoft later this week on another issue. Novell says Microsoft also broke antitrust laws in connection with its WordPerfect software business in the mid-1990s. According to Novell, it is seeking unspecified damages as a result of "Microsoft's efforts to eliminate competition in the office productivity applications market during the time that Novell owned the WordPerfect word-processing.

"Over the past two years, we have made a sustained effort to build more constructive relationships with our industry partners and competitors," said Brad Smith, senior vice president and general counsel for Microsoft. "Today's Netware settlement is a product of that effort and reflects an open dialogue the companies established to address and ultimately resolve this matter. We could not resolve claims related to WordPerfect in any manner we thought appropriate, and we are prepared to turn to the courts to resolve it."

CCIA

The CCIA has been a fierce critic of Microsoft for over a decade, filing suit against the company as part of the antitrust case brought by the Government, and encouraging and participating in the EU investigation.

The settlement announced yesterday does not attempt to resolve the differences between the two organisations, but reflects a recognition by both parties that there are important public policy issues in which they are both interested, but where cooperation has been hindered by the contentious relationship between them.

Microsoft has therefore agreed to join the CCIA and will compensate the body for certain legal-related expenditures it has incurred. Microsoft will also provide institutional support for new and important policy undertakings on which CCIA will take a leadership role.

In return, the CCIA has agreed not to continue with its appeal to the Supreme Court over the settlement in the US Government case against Microsoft and not to participate as an intervener on behalf of the European Commission in Microsoft's appeal of the Commission's March Decision.

The CCIA will also withdraw a complaint filed with the European Commission in February 2003 on issues related to Microsoft WindowsXP.

"While there may be times when we and Microsoft will not agree on every issue, we are looking forward to developing a stronger relationship," said Ed Black, president and CEO of CCIA. "We believe that CCIA has an important opportunity to help unite the industry more effectively on key issues such as broadened internet access, strong support for R&D, and ensuring that we act as an effective engine for economic growth around the world."

The Effect

Microsoft has settled numerous antitrust cases, including claims by Sun Microsystems and what used to be AOL-Time Warner.

In effect, the latest settlements mark the end of the US antitrust litigation, as Massachusetts, the only state that appealed the District Court's final judgment, has indicated that it will not be seeking a Supreme Court review of its appeal.

However, the EU proceedings are still ongoing, with a decision expected soon on whether Microsoft can delay implementing the Commission's ruling until its appeal has been decided.

With Novell and the CIIA withdrawing from the court process, some have suggested that the Commission may now be more amenable to settling the case.

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