Microsoft appeal rejected

Microsoft chief Steve Ballmer: Wants the case thrown out

The US Supreme Court has rejected Microsoft's request to throw out a ruling that it violated competition laws.

We will comply with the court order to work with the government to settle this case

Microsoft

The decision means that the computer giant must be sentenced in a lower court for violating anti-trust laws, although the judge presiding over the case has urged an out-of-court settlement.

The Supreme Court's decision will come as a blow to the software giant, which has been attempting to get the case against it thrown out altogether.

But it will be seen as a victory for the US Department of Justice and the 18 American states pursuing claims that Microsoft abused its stranglehold on the market for computer software to the detriment of consumers.

With a company split-up now off the agenda, Microsoft will most likely face penalties involving the opening up of its products to greater competition.

Microsoft "disappointed"

A Microsoft spokesman said the company was disappointed by the Supreme Court's decision.

"We will continue to move forward with the case on the district court level, and we will comply with the court order to work with the government to settle this case," he said.

In a brief statement, the Department of Justice (DoJ) said: "We are pleased with the court's decision. We will continue our progress in the District Court."

Microsoft was found guilty of anti-trust violations last year.

In its appeal to the Supreme Court, Microsoft argued that the original ruling in the case, handed down by district judge Thomas Penfield Jackson, was tainted because of his conduct after the trial.

Judge Jackson gave a series of press interviews in which he derided Microsoft executives and compared them to street criminals. In June, the appeals court rebuked Judge Jackson and reversed his order that Microsoft be split into two.

But it upheld Judge Jackson's ruling that Microsoft had used illegal tactics to maintain its dominance of the PC operating market.

Last lap?

In its appeal to the Supreme Court, Microsoft argued that the appeal judges should have thrown out all the charges against it. But the DoJ said the appeal court was under no obligation to throw out Judge Jackson's rulings.

Last month, the district judge newly assigned to the case, Colleen Kollar-Kotelly, ordered the two sides into settlement talks, with a view to bringing the case to a speedy conclusion.

Tuesday's Supreme Court decision gives no insight into the court's view of Microsoft's behaviour. But it still likely to inject fresh urgency into the settlement talks.

Judge Kollar-Kotelly said she would appoint a mediator on Friday, if necessary, to speed up proceedings. She cited the economic fallout from terror attacks as one reason for haste.

"There is no reason this case can not be settled," she said. If no settlement emerged, a status hearing would be held on 5 November with full hearings expected to follow in March, Judge Kollar-Kotelly said.

Alternative penalties

Microsoft welcomed the US government's decision earlier this year to drop efforts to break up the company.

But potential restraints on the way Microsoft develops and markets its software could prove almost as troublesome for the company.

The measures could include a ban on discriminatory pricing, making exclusive deals with retailers and suppliers and retaliating against rivals.

It could even mean other companies being allowed to make competing versions of Windows or placing a limit on what features can be included in software packages.