Ralph Nader on MS and Judge Posner

[James Love <love@cptech.org>]

   Date: Mon, 22 Nov 1999 18:36:16 -0500
  From: John Richard <jrichard@essential.org>

FOR IMMEDIATE RELEASE
In the Public Interest        Mailed 11-22-99
By Ralph Nader

 The historic Microsoft monopoly trial took an odd twist on November
19th when federal Judge Thomas Penfield Jackson secured the agreement of
the Justice Department and Microsoft to accept mediation by 7th Circuit
chief Judge Richard Posner.
 For most jurists, being a chief judge of a busy federal circuit court
of appeals would be a full time job.  But Judge Posner, often called a
brilliant workaholic who grinds out a book a year on different subjects,
thinks he can stimulate a settlement between the two warring factions.
 The stock market believes in Judge Posner's conservative reputation and
his numerous writings scathingly critical of most past antitrust
doctrines to jump Microsoft's stock nearly 5 points in after-hour
trading Friday (adding another $5 billion to Bill Gates' fortune).
 Are the boys on Wall Street being precipitous?  After all, Posner's
colleagues and several law professors consider him unpredictable and his
own man.  They point out that as a mediator, he cannot force a
settlement nor can he divulge any of the discussions to Judge Jackson or
anyone else.
 But then Judge Posner is not like any other prominent judge.  He seems
never to have had an opinion that he did not want to publish.  His 30th
book was a sharp denunciation of President Clinton's lying in the Monica
Lewinsky scandal and a general defense of Special Prosecutor Kenneth
Starr's handling of the case.  No one would accuse him of having the
conciliatory temperament that a mediator should possess.
 One of his law students tells the story of Judge Posner, as a part-time
professor at the University of Chicago Law School, coming into the first
day of class and writing the word "Justice" on the blackboard.  He then
turned and said to his class that he did not want to hear that word in
his course.
 As one of the founders of the "law and economics" school of monetized
thought, what Judge/Professor Posner meant was that quantitative
economic reasoning could explain legal issues such as by a cost-benefit
analysis.  For example, in one of his books he argued for parents'
rights to sell their children for adoption to the highest bidder.
 Throughout his career, Judge Posner, businessman Posner and law
professor Posner have challenged many a conventional attitude, and
antitrust law has been no exception.  He has written that "The evils of
natural monopoly are exaggerated, the effectiveness of regulation in
controlling them is highly questionable, and regulation costs a great
deal."
 It takes a deliberate price-fixing scheme between competitors or a
tight cartel to get his antitrust dander up.  Years before he became a
judge, Posner started a consulting firm, called Lexecon, that advised
corporations how to defeat antitrust law enforcement and undermine
regulatory actions.
 Given his voluminous antagonism to government regulation, it is not
likely that Judge Posner will nudge his sparring parties toward
"conduct" changes by Microsoft that need regulatory oversight.  But
then, would he encourage "structural" changes such as Microsoft's
breakup into two or more companies that separate its operating systems
business from its applications business?
 Certainly Judge Jackson's findings of fact would support a breakup
remedy.  But it is difficult to envision Judge Posner recommending such
a move.  He would probably prefer some
self-executing remedies upon Microsoft that would presumably unleash
competitors against the giant software company's anti-competitive
monopolies.
 In his book on Antitrust Law (1976) Posner doubted whether any company
could have enough persistent market power over time to actually impose
predatory pricing.
 Since Judge Posner, as mediator, has no decisional power and cannot
publicize his views, what is Judge Jackson's exercise here all about?
There is about a 90 day window for the mediation to conclude before
Judge Jackson issues his long-awaited findings of law.
 It appears that Judge Posner's function is to move the government and
Microsoft to a settlement by the force of his intellect and his
probabilistic assessment of either parties' chances on appeal.  All in
private, subject to his influence.
 How much better it would be to continue the open judicial process, now
that the trial phase is over, to an open judicial conclusion under the
public's watchful eye.  A full record and precedent would contribute to
the development of antitrust law in these new fields of monopolistic
technology networks.
END
-- 
James Love / Director, Consumer Project on Technology
http://www.cptech.org / love@cptech.org
P.O. Box 19367, Washington, DC 20036
voice 202.387.8030 / fax 202.234.5176