Microsoft Back in Antitrust Trouble

Adding to Microsoft's legal concerns in a week of antitrust action for the company, the Nebraska Supreme Court has given the green light for further procedures in a consumer class-action case that had previously been blocked by state courts.

Upon a rehearing of the case, the Nebraska Supreme Court in a divided 4-3 opinion reversed earlier rulings and sent the class-action lawsuit back to a lower court for further hearings.

The lawsuit alleges that Microsoft used its monopoly power to overcharge for Windows.

Legal Language

At issue was whether indirect purchasers of a product can sue a manufacturer on antitrust grounds. There are precedents in U.S. law that allow only direct purchasers of products to sue on antitrust grounds. But the court noted that state law on the issue varies from federal law and in the case of Windows, end users affected by alleged monopoly abuse of pricing are typically indirect purchasers, or people who buy from middlemen such as retailers.

"To deny the indirect purchaser, who in this case is the ultimate purchaser, the right to seek relief from unlawful conduct, would essentially remove the word consumer from the Consumer Protection Act," the court said in its majority opinion.

On the federal level, similar lawsuits against Microsoft were dismissed last year because of this issue.

In a prepared statement, a Microsoft spokesperson said "Microsoft has been a market leader in delivering great software at very competitive prices, and has even reduced prices while adding features and functionality to its products."

An attorney representing the plaintiffs said a next step in the case is to obtain judicial certification of the class of people who could participate in the lawsuit. "We're set to move on, we should be able to show that a class exists. Microsoft has records; you have to register with them when you buy software," said plaintiff's attorney Robert Hillis, of Yost, Schafersman, Lamme, Hillis, Mitchell & Schulz, of Fremont, Nebraska.

Holding Court

The Nebraska ruling came at the end of a busy legal week for Microsoft.

Elsewhere in the U.S., opening arguments began in Minnesota, in a class-action lawsuit that also accuses Microsoft of overcharging for software.

Lawyers in that case are seeking as much as $452 million for software sold in the state.

Thus far, in the wake of the U.S. government's antitrust case, in which a settlement was approved in November 2003, Microsoft has settled antitrust-related consumer lawsuits in states including California, Tennessee, North Dakota, South Dakota, and Kansas. Microsoft agreed to make software and hardware vouchers available to customers who bought the company's software.

But perhaps the biggest legal concern this week for Microsoft came in the wake of the breakdown of antitrust settlement talks with the European Union. The EU is expected to announce next Wednesday a series of antitrust remedies, including a fine, that could set a precedent that will make it easier to prosecute other complaints in Europe.