Antitrust Division Accused of Improper Foreign Contacts

(July 16, 1998)  Three Senators wrote a six page letter to Attorney General Janet Reno, and Senator Orrin Hatch, outlining improper conduct by members of the Antitrust Division in encouraging foreign governments to pursue Microsoft.

The Senators wrote that contacts with government regulators in Japan, Brazil, Israel, and the OECD were improper, and "designed to relitigate issues that the antitrust division has either lost or anticipates losing before the U.S. courts."  The July 14 letter continued:

"That does not appear to us to be a legitimate activity for the antitrust division to be pursuing abroad. We also do not think it is acceptable for the Department of Justice to encourage legal actions or even threats of legal actions by foreign countries to pressure an American company to enter into a settlement in a United States legal action."

The authors of the letter, Senators Jeff Sessions (R-AL), John Kyl (R-AZ), and Spencer Abraham (R-MI), are all members of the Senate Judiciary Committee.  The Committee has oversight authority over the Department of Justice.  The Committee is chaired by Sen. Orrin Hatch (R-UT), who is the principal spokesman in the Congress for Microsoft's competitors.

The Senators alleged that these activities harm the U.S. export trade, and "may have the effect of protecting local industry against U.S. export competition."

"Whatever the merits of the Department's various attacks on Microsoft, we hope that you will agree that it is an inappropriate use of U.S. taxpayer dollars to encourage - either purposefully or inadvertently - foreign governments to use their laws in a way that unfairly impairs the export opportunities of U.S. exporters."

DOJ's Anti-Microsoft Activities in Japan and Brazil

The letter cited as an example the DOJ's contacts with Japanese regulators.  It stated that "after a visit from Assistant Attorney General Klein, the Japanese Fair Trade Commission ("JFTC") launched an unusual and unfair raid on Microsoft (notwithstanding the company's stated willingness to cooperate with the JFTC) in an investigation which appears designed to protect the dominant Japanese publisher of word processing software from, the competition of Microsoft's Japanese version of Word."

The letter also pointed out that the Japanese have indicated that they "do no challenge Microsoft's integration of Internet browsing capabilities into Windows 98," which is at the heart of the DOJ's actions against Microsoft.  Rather, the Japanese government is investigating Microsoft on an unrelated matter.  It is "continuing its ongoing investigation against Microsoft to assess the company's competition with a Japanese company whose word processing product competes with the Japanese version of Microsoft Word."

The letter also accused the DOJ of improper contacts in Brazil "a country that in the past has sought to bar U.S. software companies from exporting there."  The letter criticized a May visit to Brazil by Russell Pittman, Chief of the Competition Policy Section for DOJ's Antitrust Division.

The letter accused Pittman of meeting with Brazilian regulators, stating to them that Microsoft "behaves like an arrogant monopolist, even acting arrogantly in its relations with the antitrust authorities, it will receive from these agencies what it deserves."  The letter concluded that, "Not surprisingly after this "pep talk", on May 29th Paulo Cremonesi, the SDE general inspector for Brazilian antitrust enforcement in Sao Paulo, disclosed that SDE was starting to explore a way to initiate legal action against Microsoft regarding the integration of Internet Explorer into Windows."

Senators Request Information From DOJ

The Senators also asked that the Department of Justice provide them with further information, and copies of documents, regarding the DOJ's foreign contacts.  The letter asks for:

"1) a complete list of all contacts between any employee of the Department and any official of a foreign government concerning the Departments investigations of, or suits against, Microsoft since July 1, 1996; 2) a description of any information exchanged during the course of those contacts; 3) any documents provided to or received from foreign governments concerning Microsoft; 4) the text of (and any notes that may have been taken by Department officials relating to) any speeches or remarks delivered to foreign government officials concerning Microsoft; 5) an explanation of, and justification, if any, for, each contact; and 6) the total time and expenditures that the Department has devoted to contacts with foreign governments concerning Microsoft."

Rep. Rick White

Rep. Rick White (R-WA) stated on July 15 that "If these reports are true, it seems as though the Department of Justice has finally gone too far. The Department has a legitimate role in ensuring compliance with U.S. law.  But enlisting foreign governments to act against American corporations is beyond the pale."  White's congressional district is home to many Microsoft employees.

White added that, "Unfortunately, this looks more and more like politics, not justice, is driving this process. We all expect the Department of Justice to administer the laws impartially, and these reports make it hard to believe they're living up to that expectation."