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News Release
November 1, 2002
CONTACT: David Fish
(202) 289-8928

Microsoft Ruling: Bad Law, Bad Economics, Will Not Stand
Eisenach & Lenard Issue Statement Critical of Antitrust Ruling

WASHINGTON, D.C. - Jeffrey A. Eisenach, president of The Progress & Freedom Foundation, and Thomas M. Lenard, PFF senior fellow and vice president for research, issued the following statement on the Microsoft decision by Judge Kollar-Kotelly:

“Today’s decision threatens to shatter 20 years of broad consensus among antitrust scholars and jurists. Until today, it was generally agreed that companies that possess market power were prohibited from engaging in a limited and well-defined set of behaviors that harm consumers, slow innovation and restrict competition. Further, when such behaviors occurred, it was understood that the antitrust authorities and the courts would impose remedies designed to (a) restore competition, (b) deprive the violator of ill-gotten gains and (c) prevent similar conduct going forward. Indeed, these are precisely the principles embodied in the Appeals Court decision that set the stage, and which should have formed the basis for, today’s ruling.

“In adopting the Justice Department’s proposed settlement, Judge Kollar-Kotelly’s decision not only flouts the guidance offered by the Court of Appeals, but eviscerates the modern antitrust consensus. In so doing, it signals to firms in every industry that it is permissible to engage in heretofore illegal conduct – or, at the very least, that the gains from doing so are likely to exceed the costs, even if you get caught.

“Some, including Microsoft, have argued that the antitrust laws should be repealed, or at least should not be applied to the IT sector. If Judge Kollar-Kotelly’s decision is allowed to stand, they will have gotten their wish, at least for the time being.

“As the decision is appealed, and as the same conduct is evaluated in other venues, however, we hope and believe that the consensus will prove too robust to be shattered by a single Assistant Attorney General and a single District Court judge. This has always been a hard case, and it is often said that “hard cases make for bad law.” This decision is bad law, bad economics, bad for consumers and, in the long run, bad for every entrepreneur or potential entrant who seeks to compete against a dominant firm in any industry. But, we suspect, it will not stand.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation