Microsoft & Monopolies

The non-settling States, which can take for granted the protection afforded by the settlement, before the Court in the Tunney Act, proceeding came to advance their own far-reaching remedial proposals, many of which appear unrelated to the theories of illegality advanced by the United States and the plaintiff States at trial and the findings of liability sustained by the Courts. This action by the non-settling States raises for the very first time the prospect that a small group of States, with no particularized interests to vindicate, might somehow obtain different relief with wide-ranging, national economic implications.

Microsoft asked that the Court rule as a matter of law; the non-settling States' claims should be dismissed, chiefly for want of standing. This meant non-settling States would appear to agree with Microsoft that, unlike the United States, they are entitled to unbiased relief under the federal antitrust laws only if they have met the requisite elements of standing under Section 16 of the Clayton Act, 15 U.S.C. 26. Microsoft and the States disagree on the requisite elements.

Microsoft contends that the States are required to demonstrate a "state-specific" wrong doing that can be distinguished from the generalized law enforcement interest in stopping Microsoft's established antitrust violations. Microsoft's arguments raise important issues of federal antitrust enforcement policy that are significant to the Court's ultimate decision in this case. But on this motion to dismiss, the United States cannot advise the Court that the precedents cited by Microsoft require dismissal prior to any further evidentiary proceedings.

The Sherman Act, as enacted in 1890, ch. 647, 26 Stat. 209, 210, gave the federal courts jurisdiction to prevent and restrain violations of the Act, and gave several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, the duty to institute proceedings in equity to prevent and restrain such violations" 15 U.S.C. 4. The Act did not provide for fair relief at the request of anyone else. Therefore, the Supreme Court held that a suit for fair relief by the State of Minnesota, alleging violations of the Sherman Act and injury to property values in the State, did not present a case arising under the Constitution or laws of the United States. Minnesota v. N. Sec. Co., 194 U.S. 48 (1904). As the Court explained;

We cannot suppose it was intended that the enforcement of the Sherman Act, should depend in any degree upon original suits in equity instituted by the states or by individuals to prevent violations of its provisions.

In 1914, Congress modified this remedial scheme by enacting the Clayton Act. While it included, Section 15, 15 U.S.C. 25, a provision virtually identical to the Section 4 of the Sherman Act, the Clayton Act also included a separate provision, Section 16, 15 U.S.C. 26, allowing private parties to seek injunctive relief when faced with prospective injury resulting from antitrust violations;

Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings.

On the one hand, the State must articulate an interest apart from the interests of particular private parties. Therefore, a State may not appear as a nominal party to advance the interests of a single private interest or commercial enterprise, or of a single industry constituent. On the other hand, because it does not act as a sovereign law enforcer, a State, unlike the United States, may not be a mere volunteer seeking to vindicate an interest in compliance with the law. Rather, a State acting as it asserts the sovereign interest in the health and well being, of both physical and economic, of its residents in general.

The important point is that, in order to maintain an action, under Section 16 of the Clayton Act, a State must demonstrate something other than the sovereign interest in enforcement of the federal antitrust laws that supports actions by the United States, under Section 15. Defining this distinction is, as the case law recognizes, is somewhat of a formless task. The United States could not agree with Microsoft's contention that established law imposes a state specific injury requirement that requires dismissal.

To establish legal standing, the non-settling States must establish that they are seeking to remedy some state-specific injury, rather than merely seeking to substitute their conclusion for that of the United States as to the manner in which federal antitrust laws should be enforced.

A major theme of Microsoft's motion is that allowing the non-settling States to precede with their claim impermissibly conflicts with the authority of the United States as the enforcer of federal antitrust law and with the pending Tunney Act proceeding, 15 U.S.C. 16(e)Tunney Act. The United States, of course, strongly believes that entry of the proposed final judgment is very much in the public interest. The United States was hardly indifferent as to the wisdom or propriety of granting such relief in this case. But under existing law, the non-settling States may pursue relief in their separate case. It is the Court's exercise of equitable discretion that must provide protection from these dangers.

Microsoft advances a variety of grounds for the immediate dismissal of the non-settling States' case as a matter of law. Ultimately these arguments carry more weight in support of jurisprudential or policy initiatives than as a basis for a district court to dismiss this case as a matter of settled law and controlling precedent. This is true of Microsoft's standing arguments, its assertions with respect to the primacy of federal enforcement and the Tunney Act, and its constitutional contentions.

Maintaining recognition of the proper distinction between the state and federal roles in antitrust enforcement is exceptionally important in light of the global nature of competition and the wide array of matters that need the attention of state and federal enforcers. Under our Constitution, for example, the States cannot appropriately conduct international relations with foreign nations pertaining to competition policy. Likewise, full effectuation of the antitrust laws benefits from persistent attention by state authorities to local issues that might escape federal attention.

Microsoft is clearly correct in saying that a state specific injury must be shown in the sense that a State must demonstrate threatened injury to its own citizens as opposed to generalized interests in law enforcement or injuries threatened only to residents of some other State or States. The problem for Microsoft, as a defendant whose antitrust violations could presumably be shown to have an impact felt in every State, is that no case denies a legal standing in a situation where substantial threatened injury to a state's citizens is present. Yet it may be deemed insufficiently state specific because the citizens of the other States also suffer it. Microsoft likewise contends that the Supreme Court has expressly held that a State may not, in its own capacity, pursue a view of the public interest that is inconsistent with that of the federal government.

Our conclusion is that a district court has the power to order divestiture in appropriate cases brought under section 16 of the Clayton Act does not, of course, mean that such power should be exercised in every situation in which the Government would be entitled to such relief under section 15. In a Government case the proof of the violation of law may itself establish sufficient public injury to warrant relief. Courts of equity may, and frequently do, go much further with respect to giving and withholding relief. Much of what is done is in furtherance of public interest, which is more than they are accustomed to do when only private interests are involved; authorizing issuance of injunction at Government's request without balancing of the equities. A private litigant, however, must have standing, in the words of section 16, he must prove "threatened loss or damage" to his own interests in order to obtain relief. Moreover, equitable defenses such as leaches, or perhaps "unclean hands," may protect consummated transactions from belated attacks by private parties when it would not be too late for the Government to vindicate the public interest. We feel the government should revisit some of these laws. The Sherman Act was created over 110 years ago and cannot be effective under today's business standards and practices. Restructuring of all of the anti-trust laws could benefit business all around. For example, the government could develop a coalition of CEO's or experts in the field to monitor companies and ensure fair business practices.

References

) Anthony D. Becker, Statutes and Constitutional Provisions, 1994-2001.

[email protected]

Clayton Act;

4, 15 U.S.C.

4C, 15 U.S.C. 15c

5(e), 15 U.S.C. 16(e) (Tunney Act)

5, 15 U.S.C. 25

6, 15 U.S.C. 26

<http://www.antitrustcases.com/statutes/clayton.html>

2) Robert Egbert, Case Review Massachusetts v. Mellon, (1923), Civil Liberties

PO 364 Constitutional Law, [email protected]

http://www.plymouth.edu/psc/library/PO364.html

3) South Carolina v. Katzenbach, 383 US 301 (1966), May 18, 2001

41 East 70th Street, New York, NY 10021 [email protected]

http://www.reformelections.org/data/background/supreme_court_cases.php

4) Sherman Act, (1890)

, 2, 7

4

http://www.local3antitrust.com/

5) U.S. Constitution, December 31, 2001

Article II

Article III

http://www.nara.gov/exhall/charters/constitution/constitution.html

6) Wired News, Transcript of Jackson's Order, June 7, 2000

http://www.wired.com/news/politics/0,1283,36855,00.html

7) Mariam-Webster's Online Dictionary, monopoly

http://www.m-w.com/cgi-bin/dictionary

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