Jurist Refuses to OK Microsoft Antitrust Pact : Software: Angry federal judge says agreement with Justice Department is unlikely to engender fair competition.

WASHINGTON —  Accusing Microsoft Corp. of lacking credibility and government lawyers of lacking competence, an angry federal judge Friday refused to ratify a controversial antitrust agreement between the computer software giant and the U.S. Department of Justice.

Banging his fist on the bench and sparring heatedly with Microsoft’s lawyer and assistant Atty. Gen. Anne K. Bingaman, an agitated U.S. District Judge Stanley Sporkin expressed deep dissatisfaction with the accord announced last July and ordered the parties to submit proposals on how the settlement might be modified--which in turn could lead to the collapse of the hard-won agreement.

“I don’t think this decree is in the public interest,” said Sporkin, a former director of enforcement at the Securities and Exchange Commission. Then, pointing at Microsoft lawyer Richard J. Urowsky, Sporkin disputed the company’s claim that the agreement would guarantee fair competition in the personal computer software industry.

“You’ve given me these assurances before, and I don’t believe them,” Sporkin thundered. “I cannot accept your word. People have to be forthcoming in this court.”

Friday’s dramatic hearing marked a startling, 11th-hour twist in the long-running antitrust controversy swirling around Microsoft. After a five-year investigation of Microsoft’s allegedly monopolistic business practices--first by the Federal Trade Commission and then by the Justice Department--the parties reached a settlement in July. The deal had to be approved by the U.S. District Court, but that requirement was regarded as a formality. It has turned out to be anything but.

Already, Sporkin had extended the period for public comment on the agreement and admitted some last-minute arguments by Microsoft’s competitors. At the end of Friday’s hearing, he said: “Let me look at this thing for a few days. I wish people would look at this whole transcript, including myself, and see if we got any message out of it.”

Sporkin did not set a date for the parties to reconvene.

Microsoft’s MS-DOS software operating system and the companion graphics interface called Windows dominate the market for PC operating software, and many in the industry have long alleged that this dominance gave Microsoft too much power--and that the company was more than willing to use that power unfairly.

But Bingaman, who has assumed a high profile as the primary architect of the Clinton Administration’s toughened antitrust policy, settled for a consent decree which many regarded as a mere slap on the wrist.

The pact bars Microsoft from using volume licensing agreements on the sale of MS-DOS and Windows to block computer manufacturers from installing rival operating software systems in the computers they sell. But it did not address many other ways in which Microsoft allegedly uses its control of the operating system market to gain advantage. The accord marked the first time that the Justice Department coordinated an antitrust accord with the nations of the European Union.

Although many legal experts believe Sporkin only has the authority to approve or disapprove a consent decree, the judge insisted Friday that he would not simply rubber-stamp the agreement. At one point, he asked the parties to consider modifying it to at least include an independent “compliance office” that would oversee enforcement of the agreement.

That request came after Sporkin took another unusual step of allowing Microsoft rivals to come into court to present arguments about possible antitrust violations that aren’t addressed in the pact. Sporkin questioned rivals about whether Microsoft competes unfairly by allowing its software developers to get a head start over competing firms in developing new spreadsheets and other products that work with MS-DOS and Windows. He also questioned why the agreement failed to address marketing practices in which Microsoft allegedly scares away potential competitors by making premature statements about products under development. “Certain things are gnawing at me,” Sporkin said.

But Microsoft and Justice Department officials said they were strongly opposed to further delay. “The court is not to substitute its judgment for our judgment,” Bingaman insisted but only make sure that “the public interest has been satisfied.”