Microsoft settles £684m antitrust suit

Posted on 13 Jan 2003 at 12:52

Microsoft has settled a pending class action lawsuit in an agreement worth up to £684m ($1.1bn).

The class-action suit, which would have gone to trial towards the end of February, was brought by businesses and individuals in California who alleged that the company used its monopolistic power to violate antitrust laws and overcharge customers for its products by as much as £25.

'This is one of the largest settlements ever reached under the antitrust or unfair competition laws of California,' said plaintiffs' lead counsel Eugene Crew.

Co-lead counsel Richard Grossman added: 'This settlement represents a significant portion of the amount that Californians paid to Microsoft for its operating system and key applications software over a seven-year period.'

The settlement, which is awaiting the judge's approval, applies to more than 50 million product licences for Microsoft products bought between 1995 and 2001 and the payment is said to be worth around 30 per cent of that value.

It will be paid out in vouchers valued between £3 to £18 that can be used for purchases of software and hardware from any manufacturer.

However, those businesses and individuals that are eligible will have to apply for the vouchers to receive them within a four-month period following the judge's approval. Any monies left over will be split, with two thirds be paid out in cash and Microsoft products to needy schools in California. Microsoft would retain the other third.

Microsoft General Counsel Brad Smith prefers to focus on these more altruistic angle of the settlement in his comments: 'This is a good resolution for all sides, and we're especially pleased by the opportunity to help thousands of schools all across California get the computers and software they need.' He added: 'This settlement allows us to focus on the future and building great software, and avoids the cost and uncertainty of a lengthy trial.'

Microsoft will also have to pay the plaintiffs' fees for their Townsend and Townsend attorneys. The company is to make a conference call this Friday to clarify the financial impact of the settlement.

Similar suits are pending in 16 other state courts in the US. However, legal experts expected the California action to be more difficult for Microsoft to defend as the state has a law that allows end-users to file cases against the manufacturers (whereas in general, US states only allow the computer vendors - the direct purchasers of the products - to file).

Author: Matt Whipp