Novell and the Computer & Communications Industry Association (CCIA), two longtime legal adversaries of Microsoft, have reached antitrust settlements with the company and withdrawn as interveners in the European Commission's (EC's) antitrust case against the company. However, the Novell settlement covers only products and businesses that Novell currently owns, and days after it was reached, Novell filed a new antitrust claim over WordPerfect, a word-processing program it owned in the 1990s.

Novell Settles, Sues

Novell and Microsoft have reached a settlement under which Novell will not pursue private antitrust claims against Microsoft on any product that Novell currently owns, including NetWare. Novell will also withdraw as an intervener in the antitrust case filed by the EC, the administrative body that oversees European Union (EU) antitrust law. In exchange, Microsoft will pay Novell US$536 million and release counterclaims against NetWare. The settlement came as a result of private mediation between the companies.

Because Novell never filed an antitrust suit against Microsoft in court, details of the two companies' private antitrust dispute are not public. However, Novell is mentioned frequently in the portion of the EC's decision that relates to client-server communications protocols. Specifically, the EC found that Microsoft did not reveal certain information about how Windows PCs communicate with Windows domain controllers, and that this made it difficult for Novell's directory products (as well as other products) to compete, given the dominance of Windows on the client side. The EC said that Novell's withdrawal will have no effect on its decision to fight Microsoft's appeal.

On Nov. 12, 2004, four days after the settlement was announced, Novell filed an antitrust suit in the U.S. District Court of Utah alleging that Microsoft used unfair tactics against WordPerfect, a word-processing application that Novell acquired from the WordPerfect Corporation, and QuattroPro, a spreadsheet application acquired from Borland. Novell paid approximately US$860 million to acquire both products in June 1994 and sold them to Corel in Mar. 1996 for US$170 million.

The suit, which seeks unspecified damages, alleges that Microsoft withheld technical information about Windows that would have helped Novell's applications better compete with Office, integrated technologies into Windows designed to exclude Novell's applications, and used its monopoly power in the desktop OS market to dissuade hardware partners from redistributing Novell's applications.

Novell says it is basing its suit partly on facts that came out during the U.S. Department of Justice's (DoJ's) antitrust lawsuit against Microsoft. The final judgment in that case found that Microsoft had maintained its desktop OS monopoly through illegal tactics, including dissuading hardware manufacturers from distributing competing products.

Microsoft Joins CCIA

In a surprising 180-degree turn, the CCIA, an IT industry organization best known for opposing Microsoft in government antitrust suits, has dropped its participation in several of these suits and accepted Microsoft as a member.

Specifically, the CCIA will not appeal a June 30, 2004, U.S. appeals court decision upholding Microsoft's antitrust settlement with the DoJ and several states, putting a final end to that case; has withdrawn as an intervener in the EC's antitrust case; and has withdrawn a Feb. 2003 complaint to the EC that Windows XP unfairly guides customers to other Microsoft products and services.

Microsoft has reportedly paid US$65,000 to join the CCIA and reimbursed the organization an unknown sum for legal expenses. The CCIA said it would use Microsoft's membership to help influence "important policy undertakings," such as impending government legislation that could affect the IT industry. For instance, in Mar. 2003, the CCIA lobbied against a proposed bill in the U.S. Congress that would have allowed content owners to legally hack into and disable file-trading networks.

Resources

The EC's decision against Microsoft is outlined in "EU Aims to Restrict 'Future Conduct'" on page 36 of the May 2004 Update. The full text of the decision is available in PDF format at europa.eu.int/comm/competition/antitrust/cases/decisions/37792/en.pdf.

The full text of Novell's complaint can be downloaded from www.novell.com/news/press/archive/2004/11/pr04077_pdf.html.

The CCIA's Web site is www.ccianet.org.