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Court victory for Microsoft

Washington, Nov. 2 (Reuters): A federal judge on Friday endorsed Microsoft Corp’s antitrust settlement with the US government and nine states in a victory for the software giant that thrilled investors.

US district Judge Colleen Kollar-Kotelly rejected nearly all the demands for stronger sanctions by a group of nine other states, saying they “present little, if any, legitimate justification for these remedies and in most instances these proposals are not supported by any economic analysis.”

The non-settling states had charged the agreement was too weak to stop Microsoft from abusing its dominance.

California attorney general Bill Lockyer told reporters that his initial inclination is not to continue the legal fight with Microsoft, although he would not completely rule out an appeal. Lockyer said he believes Microsoft will comply with the decrees. “I think they are aware of the drain on corporate attention” from the case, he said.

Microsoft stock, which had been down ahead of word of the ruling, rose $ 3.33 or 6.3 per cent to $ 56.70 a share on the decision in after hours trading.

Kollar-Kotelly's ruling acknowledged that Microsoft “has a tendency to minimise the effects of its illegal conduct” and had showed a “paternalistic view” towards consumers.

But the judge agreed with Microsoft that most of the states' proposals went beyond the company’s misdeeds, and that they would mostly benefit Microsoft competitors.

The US Justice department applauded the ruling, saying the settlement would both address Microsoft’s unlawful conduct and restore competitive conditions in the software industry.

Attorney general John Ashcroft said the department was “strongly committed” to ensuring that Microsoft complies with the settlement and will continue to closely monitor the company's implementation of its terms.

Sun Microsystems Inc, one of Microsoft's harshest critics, said the states should appeal.

AOL Time Warner general counsel Paul T. Cappuccio said the ruling made “a weak settlement stronger.” He said Netscape, AOL Time Warner's web browser subsidiary, would challenge Microsoft in a pending lawsuit “designed to promote competition and deter further anticompetitive behaviour.”

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