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Tuesday, 7 December, 1999, 18:56 GMT
US v Microsoft: The mediator

By BBC News Online's Kevin Anderson in Washington

Judge Richard Posner has been described by his peers as one of the most important anti-trust scholars in the last half century.

This standing among anti-trust scholars made him a logical choice to serve as mediator for settlement talks between the government and Microsoft.

Judge Thomas Penfield Jackson, who is overseeing the case, has repeatedly encouraged both sides to come to some kind of agreement. However, they remained far apart even after Judge Jackson issued a withering preliminary ruling that found Microsoft had abused its monopoly power and harmed consumers.

With little to show after three face-to-face meetings, the judge asked Mr Posner to act as mediator.

Prolific writer and thinker

Judge Posner is a leading scholar on how economics and the law interact, applying the free market theories of the Chicago School and Milton Friedman.

He has applied cost-benefit and efficiency analysis to a wide range of legal issues, and has written more than 30 books and numerous articles in legal journals and the press.

Unlike many on the bench, Judge Posner has waded fearlessly into some of the most contentious areas of public debate, including sexuality, adoption, rape, Aids and human cloning.

Many believe that his outspokenness has been the only thing that has stood in the way of his appointment to the US Supreme Court. But as Ian Ayres of the Yale Law School once wrote, Judge Posner is "a man driven by an intellectual vision, not by concerns with promotion".

In a famous 1978 article, he argued that buying and selling babies on the open market would encourage adoption.

Demand for newborns constantly outstripped supply because there was no pricing mechanism, he said.

Anti-trust expert

The world's richest man, Bill Gates, is at the mercy of Richard Posner
A significant amount of his writings deals with anti-trust law, an area where his two interests - law and economics - meet.

Before being appointed to the federal court in 1981 by President Ronald Reagan, he helped found Lexecon Incorporated, a consultancy that advanced the economic theories of the Chicago School.

The consultancy counted among its early clients several companies that wanted to know if their business practices violated anti-trust law.

And early in his career in the mid-1970s, he wrote two books on anti-trust case history and law.

He called for major reforms in the application of anti-trust law, arguing for narrow view of anti-trust law that would regulate only the most obvious and egregious examples of price-fixing by corporate coalitions and mergers that would eliminate competition.

However, his writings and rulings do not shed much light on how he might view the Microsoft case.

Unlike the cartels and corporate coalitions he addressed in his books on anti-trust law, Microsoft is a single company that gained a dominant market position.

Respect from both sides

The browser wars between Microsoft's Internet Explorer and rival Netscape triggered the anti-trust trial
The fact that his position is unclear only bolsters his standing as a mediator.

And any statement by Judge Posner on either sides' chances during the appeal will hold a great deal of credibility, though.

Before his appointment, many court watchers had expected Microsoft to weather a ruling by Judge Jackson with the hopes that the decision would be overturned on appeal.

Sides far apart

Nonetheless, Mr Posner faces a daunting challenge in bringing the two sides together.

Earlier talks went nowhere, and the strongly worded ruling by Judge Jackson might have emboldened the government to seek the stiffest possible remedies. This could include breaking up the company or forcing it to license its source code to other software makers.

Microsoft has fiercely resisted such proposals.

But Judge Jackson's ruling may have given Microsoft good reason to settle.

And although the government seems to have the upper hand, the Department of Justice and the 19 states that helped bring the case have differing ideas about how to proceed.

The trial will continue as scheduled, with a final ruling by Judge Jackson expected as late as March.

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See also:
07 Dec 99 |  Business
Microsoft shares drop on anti-trust move

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