AAI Sues DOJ and Microsoft for Multiple Failures to Comply Fully With Antitrust Settlement Disclosure Requirements

AAI SUES U.S., MICROSOFT FOR FAILURE TO COMPLY WITH TUNNEY ACT ANTITRUST SETTLEMENT DISCLOSURE REQUIREMENTS

CONTACTS: Albert Foer, President, AAI 202-244-9800
Robert Lande, Senior Research Scholar, AAI, 301-585-5229
Norman Hawker, Research Fellow, AAI, 616-387-6118

Washington, DC. The American Antitrust Institute today filed a Complaint for declaratory and injunctive relief in the United States District Court for the District of Columbia. According to the Complaint, both the Department of Justice and Microsoft Corporation failed to make public disclosures required by the Tunney Act. The Complaint asks the Court to require the Department and Microsoft to make certain required disclosures about their proposed settlement and to prevent them from proceeding with the settlement until they do so.

The Tunney Act was passed in 1974 to permit the public to comment on antitrust settlements. The legislation arose out of scandals in which it appeared that some settlements had been made in return for political contributions. The Tunney Act requires the Department of Justice and defendants to make specified disclosures and explanations on the public record and then give the public sixty days to comment on whether the settlement is in “the public interest.” The comment period on the proposed settlement in the Microsoft case ends on January 28. The AAI has prepared comments, but contends that its comments are incomplete because it did not have all the information that is required to be disclosed under the law.

Under the Tunney Act, the Court will review the Justice Department’s responses to comments that are filed and will then rule whether the settlement is in the public interest. The Complaint seeks to prevent the Department and Microsoft from proceeding with their proposed settlement until after they have fully complied with their disclosure requirements.

Specifically, the Complaint makes the following points:

• The Tunney Act requires the Justice Department’s Competitive Impact Statement (CIS) to provide a “description and evaluation” of why the Department rejected various alternative remedies. The AAI alleges that although the CIS identifies alternatives considered, it does not evaluate or explain the Department’s reasoning, merely stating in a brief paragraph that it concluded its own proposed remedy was best. The AAI asks that the Department be required to explain its reasoning.
• The Tunney Act requires the CIS to explain how the proposed settlement impacts private litigation. The CIS merely recites that antitrust violations can be the subject of private damages actions under the Clayton Act. The AAI asks the Court to require the Department to explain whether the proposed settlement might affect findings of fact and law already established in the case and which would otherwise be binding in the many private cases being litigated against Microsoft now or in the future.
• The Tunney Act requires the Department to disclose “determinative” documents that led to the proposed settlement. The Department has taken the position that there are no such documents. The AAI asks the Court to assure that the Department, in reaching the conclusion that no documents were determinative, focused on the entire settlement process and not merely the literal words of the final proposed settlement.
• The Tunney Act requires Microsoft to provide a “description” of any and all communications made by Microsoft or on its behalf with officers or employees of the U.S. government. Microsoft stated that a number of conversations occurred but did not describe any of them. Microsoft certified to the Court that its disclosures were true and complete. Although there have been numerous press reports concerning Microsoft contacts on Capitol Hill, none were disclosed. AAI asks that the Court ensure that Microsoft has disclosed all of the communications it is required to disclose. AAI also asks the Court to require Microsoft to describe the nature of the reported communications in sufficient detail that the public can be assured that the public interest is being served by the settlement.
• The Tunney Act permits Microsoft to forego disclosure of communications between its “Counsel of Record” and officials of the Department. No disclosures were made with respect to settlement-related conversations that reportedly occurred between a senior attorney for Microsoft and officials of the Department. The attorney was designated “Counsel of Record” after these conversations. AAI asks that the Court clarify that the Counsel of Record designation cannot be used retroactively to hide otherwise disclosable communications.

According to AAI President Albert A. Foer, “The Tunney Act is supposed to be a meaningful statute, providing meaningful disclosures that will inform the public so that it can fully evaluate an antitrust settlement. In this, the most important antitrust case of our generation, it is essential that the process be adhered to with care and commitment. Transparency is crucial to the public’s acceptance of the eventual outcome. The Court’s intervention is needed because Microsoft and the Justice Department simply did not live up to their obligations.”

The American Antitrust Institute is an independent education, research, and advocacy organization, the only public interest group dedicated specifically to support of the laws and institutions of antitrust. Its website is www.antitrustinstitute.org.

The complete complaint can be downloaded here in Adobe Acrobat format.