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Microsoft Picks Three for Watchdog Panel

The Justice Department and state attorneys general will have a say in Microsoft's compliance with sanctions from last week's closure of the anti-trust case.

WASHINGTON, D.C. (AP) -- Microsoft took early steps to begin obeying court-approved sanctions in its antitrust case, appointing three of its existing board members to a new committee responsible for making sure the software maker doesn't break the rules.

Friday's appointments satisfy one requirement that U.S. District Judge Colleen Kollar-Kotelly imposed against Microsoft on behalf of nine states that had rejected a settlement the company negotiated with the Justice Department.

The judge ordered Microsoft to allow computer makers and customers to remove icons for some Microsoft features, share some technical information with rivals, agree to uniform contracts with computer makers and agree not to participate in exclusive deals that could hurt competitors.

The new committee is one of two oversight groups established under the judge's rulings. The Justice Department and state attorneys general also can file complaints with the judge if Microsoft fails to abide by the sanctions.

The new committee, led by Harvard University business professor James I. Cash Jr., 54, of Boston, will hire at an unspecified future date a compliance officer who will enforce the judge's sanctions.

Microsoft will almost certainly pay that officer's salary, but those financial arrangements and the exact day-to-day responsibilities of the three-person committee are among "many things that will have to be spelled out," said Brad Smith, Microsoft's general counsel.

The other new committee members are Ann McLaughlin Korologos, of Washington, former Labor secretary under President Reagan; and Raymond V. Gilmartin, of New Jersey, president and chief executive at Merck & Co. Inc., one of the nation's largest drug companies. All joined Microsoft's board after January 2000.

As board members, each is paid $35,000 by Microsoft. Last year, they also received options to buy 10,000 shares of Microsoft, according to Microsoft's securities filings.

In creating the committee, Microsoft's board explicitly acknowledged the additional oversight by the government. Directors said the board "recognizes and appreciates the important roles the Department of Justice and each of the state attorneys general will play in their oversight of Microsoft's compliance."

Under the judge's orders, only board members who were not employees could be appointed to the committee -- which ruled out Microsoft Chairman Bill Gates, chief executive Steve Ballmer and former Microsoft President Jon Shirley. Microsoft's other board members are venture-capitalist David Marquardt and William Reed Jr., a retired businessman.

Korologos is currently a senior adviser with Benedetto Gartland & Co. Inc., a private investment banking company, according to Microsoft's records.

Also Friday, the sides agreed to minor changes imposed by the judge to the antitrust settlement. The changes explicitly give Kollar-Kotelly additional authority to ensure that Microsoft abides by the agreement over the next five years.

Copyright 2002. Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.