IBM And Microsoft Settle Anti-Trust Suit

by Glen Shapiro, LawAndTax-News.com, New York

05 July 2005

In a resolution of claims resulting from the US anti-trust case against Microsoft in the mid-1990s, the software giant agreed to pay IBM $775 million and extend a $75 million credit for Microsoft software at IBM.

For its part, IBM said it would not proceed with claims for damages against Microsoft. IBM had made discriminatory pricing and overcharge claims against Microsoft as part of the antitrust case. The claims mostly related to the IBM OS/2 operating system and SmartSuite products.

The two companies had previously agreed to a stand-off in the various actions while they explored possible resolutions, but the agreement would have expired in July.

Despite legal battles, the companies cooperate as much as they compete, working together in standards groups to facilitate the creation of Internet protocols.

"With these antitrust issues behind us, both Microsoft and IBM can move ahead, at times cooperatively and at times competitively, to bring the best products and services to customers," said Brad Smith, general counsel and senior vice president, Microsoft. "Over the last few years we have been focused on resolving our disputes with other companies, and today's announcement takes another significant step towards achieving that goal."

Microsoft has been making concerted efforts to deal with the slew of antitrust and other legal claims brought against it by rivals. Settlements in the last two years have included Time Warner ($750 million, May 2003), Sun Micro ($1.95 billion, April 2004), Novell ($536 million, Nov. 2004), Burst.com ($60 million, March 2005), and Gateway ($150 million, April 2005).

The company remains at odds with the EU, which has attacked the company's software bundling practices and levied a record fine of $613 million in March 2004 and imposed other penalties, which are still under discussion.

There are other outstanding suits; but for such as Microsoft, there probably always will be, and the total amounts involved are not life-threatening for the company.

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