Microsoft settles IBM antitrust claims

By Martin LaMonica
Posted on ZDNet News: Jul 1, 2005 2:02:00 PM

Microsoft and IBM have settled outstanding legal claims stemming from the U.S. government's antitrust case against Microsoft in the mid-1990s.

The agreement, announced Friday, will result in a $775 million payment to IBM and a $75 million credit toward Microsoft software.

In the course of the U.S. Justice Department's antitrust suit against the software giant, the government claimed that IBM suffered from Microsoft's discriminatory pricing and overcharging practices, according to a Microsoft statement released Friday.

The settlement resolves those antitrust claims, as well as others related to IBM's OS/2 operating system and SmartSuite desktop application suite.

"IBM is pleased that we have amicably resolved these longstanding issues," Ed Lineen, senior vice president and general counsel for IBM, said in the statement.

The pact does not cover claims for alleged harm to IBM's server hardware or server software business.

As part of the settlement, IBM has agreed to not seek monetary damages related to server products for two years and not make server-related claims involving events prior to June 30, 2002, according to Microsoft's statement.

Microsoft has sought to resolve all of the ongoing legal processes against the company, including antitrust claims, over the past few years. In the statement, Brad Smith, Microsoft's general counsel and senior vice president, said the IBM resolution is a "significant step toward achieving that goal."

In November 2003, Microsoft and IBM entered into "tolling agreements," which extended the statute of limitations on IBM's antitrust claims against Microsoft without litigation. With those agreements set to expire in July, the companies spent the last two months devising a settlement.