Federal antitrust investigators are
investigating whether Microsoft's stake in rival Corel Corp.
reduces competition in the market for office software like word
processing and spreadsheets.
The investigation was confirmed both by the Justice Department
and by Microsoft.
"We're looking at the transaction" in which Microsoft invested
$135 million in Corel last October, said Justice spokeswoman Gina
Talamona. She said it was a merger investigation "to look at the
competitive effects of the transaction."
But Talamona denied a report in The Wall Street Journal that
Justice's antitrust division also was looking into Microsoft's
pending $1.1 billion buyout of Great Plains Software Inc. "We are
not investigating the Great Plains deal, and we never opened an
investigation into it," Talamona said.
The Great Plains deal was large enough that the companies were
required to report it in advance to the government under the
Hart-Scott Rodino Act. The antitrust division reviews that data but
does not open investigations if it sees no competitive problems
with the deals.
On the Corel investigation, Microsoft spokesman Jim Cullinan in
Seattle said that Microsoft had received a request for information
from the department about "an aspect of our relationship with
Corel."
"We are in full cooperation with the request, but we cannot
discuss the details of the inquiry," Cullinan said.
That request came three weeks ago, the Journal reported.
Prosecutors are investigating whether Microsoft's share in Corel
reduces competition in the market for office software packages, the
paper said. Microsoft already dominates that market with its
Microsoft Office package of software.
Corel's WordPerfect Office software is important for competition
as it is also available in a version based on Linux, a computer
operating system that competes with Microsoft's Windows program.
Cullinan said the agreement Microsoft signed with Corel does not
prevent Corel from working on competing platforms.
"We do not think that there are any legal issues in regards to
the Corel transaction that should be a concern," Cullinan said.
The investigation is separate from the government's pending
lawsuit to break Microsoft into two companies. The company has
appealed a break up order issued by a U.S. district judge. The U.S.
Circuit Court of Appeals for the District of Columbia will hear
arguments in that appeal Feb. 26-27.
While there is some doubt that Bush administration officials
favor such a drastic move as splitting the software giant,
President Bush's expected choice for head of the antitrust
division, Washington lawyer Charles A. James, has yet to be
formally announced, much less confirmed or taken office.
Observers expect the Bush administration will not make any move
to alter the government's case at least until after the appeals
court rules, because that court may save them the trouble by
ordering a more limited remedy for the abusive monopolistic conduct
that Judge Thomas Penfield Jackson ruled Microsoft had committed.
