On July 16, a federal jury in Connecticut rejected charges of anti-competitive behaviour brought against Microsoft Corporation by computer manufacturer Bristol Technologies Inc.

As we went to press, the Microsoft trial was due to resume, with the software giant expected to highlight recent changes in the industry - notably the marriage of AOL and browser rival Netscape - to show that there is in fact healthy competition in the industry.

Microsoft chairman Bill Gates has indicated that the software giant also wants to settle a case that has kept it occupied for more than a year and threatened to tarnish its reputation with unwelcome publicity.

Judge Thomas Penfield Jackson of the Federal District Court has set a trial date of October 15 for the Department of Justice (DoJ)’s antitrust suit against Microsoft, following a request by Microsoft for a delay to the original September 23 trial date.

A month after the DoJ launched a broad antitrust suit against Microsoft, a Washington appeals court accepted Microsoft’s argument that bundling its browser software into Widows constituted a technological improvement for consumers - a decision that opened the way for a subdued retail launch of Windows 98.

It remains to be seen what impact the appeals court’s decision will have on the broad new antitrust case that the Justice Department has filed against Microsoft. A key allegation in that case is that Microsoft is illegally ‘bundling’ Internet Explorer with its new Windows 98 platform. Following the appellate court ruling, the Department issued a statement saying that it remains 'confident that the evidence... will demonstrate that Microsoft's conduct has violated federal antitrust law'. However, a former senior Department official was quoted as saying that the appellate court decision 'cuts the legs out from under the... Department on their new case. It is potentially devastating.' The government’s case, which will be heard by the same judge whose injunction the appeals court overturned, is scheduled to go to trial in early September.Ronan P HartyDavis Polk & WardwellNew York City

What will Joel Klein do next? That was the big question as GCR went to press, with Antitrust Department staffers and Microsoft lawyers, led by William H Neukom, huddled in Washington in what were termed 'settlement talks' aimed at averting a looming landmark action against the software giant.

The current dispute between the government and Microsoft intensified in mid-December when the Justice Department filed a motion to hold Microsoft in civil contempt for alleged non-compliance with the court’s order that Microsoft temporarily cease the practices at issue in the government’s case. The government argued that the means chosen by Microsoft to comply with the judge’s order did not constitute adequate compliance with the order. The government sought civil penalties of US$1 million per day.Microsoft has now entered into a settlement agreement with the government to resolve this aspect of the case.Ronan P HartyDavis Polk & WardwellNew York

Brussels cleared the way for Microsoft’s run-in with the US Department of Justice when it closed an important case against the software giant at the end of November.

The US Department of Justice hopes to clarify some problems in the antitrust field in relation to technology when it prosecutes computer software giant Microsoft. The DoJ has filed a petition in the District of Columbia asking a judge to find the company in breach of a consent decree of 1995 requiring the company to alter the way it supplied software to personal computer manufacturers.