Microsoft Faces New Antitrust Investigation

Baldwin Louie — Wed, 14 Feb 2001 14:00:00 -0800

Microsoft (MSFT)'s investment in software developer Corel (CORL) is under antitrust investigation, a U.S. Justice Department spokeswoman has confirmed.

The Justice Department investigation, first reported in the Wall Street Journal, is exploring whether Microsoft's stake in Corel will reduce competition in the market for word processing, spreadsheets and graphics software, according to the report. Microsoft currently has 90 percent of that market with its Office software package.

"We're looking at that one," confirms Justice Department spokeswoman Gina Talamona, adding that the investigation was a routine antitrust inquiry.

Talamona denies, however, that the department is also investigating Microsoft's prospective buyout of Great Plains Software (GPSI), a Fargo, N.D., business software maker, as the Wall Street Journal had reported.

The Journal reported that lawyers briefed on the case said the Justice Department served Microsoft with a subpoena three weeks ago, requiring it to hand over documents relating to the investment.

"It is a narrowly focused request for information," says Microsoft spokesman Jim Cullinan. "We can't comment beyond that because this is supposed to be a confidential process. Nothing in our investment in Corel should raise any legal concerns, but we are cooperating with the Justice Department to provide them with the information they've requested."

The news of a fresh Justice probe of Microsoft comes as the department and the software giant prepare for oral arguments Feb. 26 and 27 in a federal appellate court in Washington. Microsoft is appealing a district court judge's order last June mandating a company break-up to remedy multiple violations of federal and state antitrust law.

In October Microsoft invested $135 million in loss-making Corel, best known for the Word Perfect word-processing program.

Corel's decision to leave the market for the Linux operating system shortly after the investment by Microsoft has raised other antitrust concerns.

The Corel inquiry adds to the list of antitrust matters inherited by U.S. Attorney General John Ashcroft. The Bush administration has yet to fill the post of assistant attorney general for antitrust. Charles James, a Washington attorney and former acting assistant attorney general, apparently has the inside track. But no successor is likely to weigh in on the ongoing federal antitrust case until the appeals court rules later this year.

On Feb. 26 and 27, a U.S. Circuit Court appellate panel will hear Microsoft's appeal against the Justice Department's broader case. Microsoft lost that late last year when the U.S. District Court Judge Thomas Penfield Jackson ruled the company be split in two.

The Industry Standard - Microsoft Faces New Antitrust Investigation - Comments

Microsoft Faces New Antitrust Investigation