President-elect George W. Bush and his cabinet will soon decide what to do about the Microsoft antitrust case, a spokesman said on Friday.
"The incoming administration and the incoming attorney general will review them and make any decisions as necessary," Ari Fleischer, Bush-Cheney transition spokesman, said in response to a question about Microsoft and other lawsuits the Clinton administration has filed.
Fleischer, at the daily transition press conference, said he would not comment further on the Microsoft case. But he said that in general, Bush believes that the feds "too often engage in litigation to solve problems."
"The president-elect will not rush to litigate the way some folks in Washington enjoy litigating," Fleischer said. The next head of the Justice Department -- ex-Sen. John Ashcroft has been nominated for the job -- will have the option not to appeal a loss if the DC Court of Appeals sides with Microsoft.
During the campaign, Bush has made statements critical of the Clinton administration’s dogged pursuit of Microsoft, saying that he prefers "innovation over regulation."
Also on Friday, the Justice Department and some state governments urged the appeals court to uphold findings that Microsoft broke the law and should be split in two to prevent future violations.
In a filing with the U.S. Court of Appeals, the government said the Microsoft matter was "a classic case of monopolization" in which market dominance was used to sustain or extend that power.
"The district court acted properly in imposing the structural and conduct remedy for Microsoft's wide-ranging course of illegal actions," said part of the 150-page brief.
Last June, District Judge Thomas Penfield Jackson found that Microsoft holds monopoly power in the market for personal computer operating systems with its Windows product, and illegally used that power to crush competitors, including Web-browser rival Netscape.
On June 7, Jackson ordered that the company be broken up to prevent future antitrust violations and set other remedies, all of which he suspended pending appeal.
Free-market groups rallied on Friday to slam the government’s filing.
"It is tragic that the DOJ and 19 states continue to spend taxpayer funds on such a baseless case," said Erick Gustafson, an analyst at Citizens for a Sound Economy, a group headed by a former George Bush Sr. White House counsel.
"So far the DOJ has spent nearly $50 million, while Microsoft's value dropped more than 50 percent," Gustafson said. "Continued prosecution of the company can only lead to even more disastrous consequences. The world of software has changed since 1998 and only government lawyers hold fast to antiquated antitrust regulatory initiatives."
Microsoft told the appeals court in November that the trial court proceeding was "infected with error" and described the breakup order as "radical relief."
But the government said the breakup and various conduct remedies were designed to end unlawful conduct and prevent its recurrence.
"The structural relief wisely relies on ordinary market incentives, rather than long-term judicial oversight," the filing said.
The government had wanted the Supreme Court to directly hear the company's appeal, but the high court sided with Microsoft and sent the case to the lower appellate court, which ruled for the company in a related case in 1998.
Microsoft has drawn the appeals court's attention to Judge Jackson's many comments on the case both during and after the trial as sufficient grounds to vacate the judgment.
Jackson may also have offended the judges on the appeals court with remarks about his 1998 reversal quoted in a recently released book about the trial by New Yorker magazine writer Ken Auletta.
"They went ahead and made up about 90 percent of the facts on their own," Jackson is quoted as telling Auletta.
But the Department of Justice, 19 states and the District of Columbia that brought the case said Microsoft could not establish any prejudice from the out-of-court statements.
"Those statement provide no grounds for inferring bias or partiality, nor establish a basis for setting aside the judgment or removing him from subsequent proceedings," they said.
Friday's filing could be the final word for senior Justice Department antitrust officials, who will likely be replaced by the incoming Republican administration of President-elect George W. Bush before oral arguments scheduled to take place Feb. 26-27.
The states have said they are prepared to carry the case forward on their own, to the Supreme Court if necessary, should the Bush administration try to back away.
In another development in the case Friday, an industry trade group representing rivals of Microsoft said it had hired former Whitewater prosecutor Kenneth Starr to help support the government.
Starr, whose credentials include a stint on the U.S. Court of Appeals that is hearing the case, has been engaged by Procomp, an organization that includes AOL Time Warner, Sun Microsystems and Oracle.
Starr, who continued a probe into President Clinton's investment in a failed Arkansas land deal called Whitewater, is best known for his dogged pursuit of Clinton's affair with White House intern Monica Lewinsky. He stepped down as Whitewater prosecutor in 1999.
Reuters contributed to this report.
