Jun 05, 2000 (Tech Web - CMP via COMTEX) -- The Justice Department on Monday rejected most of the revisions Microsoft seeks in the government's breakup proposal because they would create "loopholes" for the software giant to continue anti-competitive practices.

However, the government accepted some minor changes in the wording of the proposed antitrust remedy. Microsoft (stock: MSFT) has until Wednesday to file its response to the government's comments. U.S. District Judge Thomas Penfield Jackson could rule on Microsoft's fate at anytime after that.

The Justice Department and 17 states want to break up Microsoft into an operating system company and applications company, and impose conduct restrictions to encourage competition. Microsoft has called the breakup plan "extreme and unjustified."

On Friday, Jackson extended the final comment period after government attorneys said some Microsoft revisions had some merit. Microsoft sought major changes in the timing of the government's breakup proposal in what was supposed to be the final word in the 78-day trial and battle of briefs.

The department refused Microsoft's 12-month timeframe over the government's proposed four-month timetable to outline its own breakup, but accepted Microsoft's term "divestiture" instead of "reorganization" to more accurately define the remedy.

The rest was brushed aside.

"Microsoft's other proposals consist largely of changes that would create loopholes and permit Microsoft to continue to engage in anti-competitive practices like those found by the court or otherwise to frustrate or undermine the purposes of the final judgment," the department said in its brief.

"Many of Microsoft's comments go beyond merely addressing the proposed form ... and make arguments about the merits that Microsoft has previously raised and that plaintiffs have addressed in their prior filings," the brief said.

Despite the extended legal maneuverings, Jackson wants the remedy process to be speedy and the government wants to keep the momentum going for an anticipated breakup, said William Kovacic, George Washington University law professor.

"By describing repeatedly how the breakup will happen, it almost gives some credibility to the idea," he said.

Microsoft was up 1 1/2 to 67 7/16 in afternoon trading.

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Copyright (C) 2000 CMP Media Inc.

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