Sorry, Bill. Charles James Is No Softie

The top U.S. trustbuster may not see things Microsoft's way

When Charles A. James was nominated as the Justice Dept.'s top trustbuster this spring, he soon found out all sorts of new things about himself. In Jet magazine, for instance, he read that he was a social conservative whose appointment was engineered by his mentor Supreme Court Justice Clarence Thomas. ``An interesting analysis,'' says James, ``considering I've never met Justice Thomas.''

Other evaluations have been equally suspect. After President Bush tapped several rightward-leaning, pro-business nominees for key posts, it was widely assumed that James would be opposed to aggressive antitrust enforcement. Or, to put it another way, that he would be the antithesis of his predecessor, Joel I. Klein. That, in turn, was viewed as great news for Klein's main target: Microsoft Corp. (MSFT )

It's early yet, but so far these predictions appear to be off the mark. Since June 28, when the District of Columbia Circuit Court of Appeals found Microsoft in violation of the Sherman Antitrust Act, James has put together a tough prosecutorial team to take on the software giant. What's more, James has pressed the appeals court to appoint a new judge quickly to mete out Microsoft's punishment--a move intended to thwart the company's delaying tactics. And in an hourlong chat with BusinessWeek on July 31, his first on-the-record interview since taking office, he didn't sound like someone predisposed to let the company off lightly. (To read edited excerpts of that interview, see BW Online, 8/03/01, "A Chat with Justice's Charles James".)


  ``I thought [the appellate ruling] was a very positive decision for the government,'' James said. ``Just about any practicing antitrust lawyer who followed the trial would not have been very surprised by the court ruling.''

Of course, critical issues that test James's commitment to the Microsoft prosecution still lie ahead. The first is likely to be the introduction of the company's new operating system, Windows XP, scheduled to ship on Oct. 25. Because it is bundled with many new features, company critics have been pressuring trustbusters to go to court to block the product release. So far, the betting is that James won't take such a radical step and risk roiling the computer industry.

Another test will be the remedy he favors. Company critics are wondering if he will punish Microsoft for past behavior while leaving it with a free hand for the future. While he declined to comment on specific remedies, he did say he thinks trustbusters can seek a punishment that covers new efforts to extend the company's monopoly. ``The standard formulation on remedy is that it ought to cure past violations and prevent their recurrence,'' says James. ``That's what antitrust is all about.''

With views like those, why was James pegged as the anti-Klein? In part, because few outside Washington know him. Unlike many previous antitrust chiefs, James is not a political animal. He avoids the social circuit, has never been a big wheel in the Republican Party machinery, and lacks close ties to the White House that nominated him.


  A devotee of rap music, bodybuilding, and German sports cars--``You can be a competent antitrust lawyer and still have fun,'' he quips--James has little in common with his buttoned-down predecessors. He's also a gadget freak, who comes to the job with a strong understanding of technology: He loves his Palm Pilot, downloads MP3 music files on his home computer in Arlington, Va., and owns multiple laptops.

Good friend Timothy J. Muris, the new chairman of the Federal Trade Commission, says James isn't afraid to think for himself. ``He certainly was not afraid to tell me when I was wrong,'' says Muris, who first met James when they were both young lawyers at the FTC in the early 1980s.

Still, it would be going too far to call James a gung ho trustbuster. He describes himself as a ``bedrock conservative'' and is quick to criticize antitrust theories that aren't grounded in solid economic analysis. After the European Union blocked the General Electric-Honeywell merger, for example, he sharply condemned the ruling.

At the same time, though, he is committed to the underlying values of antitrust law: preserving competition and consumer choice. James has practiced antitrust law his entire career, shuttling between government and the giant law firm Jones, Day, Reavis & Pogue. And, like most other people who work with the Sherman, Clayton, and Robinson-Patman Acts, he recognizes that, as James D. Wareham, a colleague from Jones Day, puts it, ``there are things companies do that are anticompetitive.''

Serving in the Justice Dept. during the first Bush Administration, James was fairly tough on business. He wrote new merger guidelines that his Democratic successors added to only slightly. He also had occasional spats with industry groups that thought they should be the exception to antitrust rules. One such group--health maintenance organizations--argued to James in 1992 that it could reach more of the nation's uninsured if it were granted a little slack on his 1992 merger guidelines. He didn't buy it.

As for his predecessor, James is quick to note that he and the controversial trustbuster share many values. ``I don't really anticipate there will be any sea change in enforcement policy,'' he says. ``The antitrust division has been left in very good shape by Joel Klein.''


  Not surprisingly, James is intensely focused on the high-profile Microsoft case. Indeed, while he was awaiting confirmation, James says, he spent days reading the trial transcripts to get up to speed on the case. Once in office, he named as his Microsoft point man Philip S. Beck, a tough private litigator. Even more tellingly, he also picked for his team Justice veteran Phillip R. Malone, the first lawyer at the agency to advocate suing Microsoft and one of Klein's key advisers during the trial.

These appointments come as a pleasant surprise to the state attorneys general who joined the Justice Dept. in its antitrust suit. Says Connecticut Attorney General Richard Blumenthal: ``I have a feeling we're pushing on an open door.''

Clearly James's line is much tougher than anybody would have expected a few weeks ago. And it can't bring good cheer to any Microsoft executives who hoped James--and the new administration he's a part of--might be their salvation.

RESUME   Charles A. James
BORN   Newark, N.J., 1954
EDUCATION   B.A. Wesleyan University, 1976. J.D. George Washington University, 1979.
CAREER   Started out at Federal Trade Commission, then joined megafirm Jones, Day, Reavis & Pogue. He has since shuttled between private practice and government service.
POLITICAL STRIPES   James has been a Republican since his 20s. But he has never worked on a campaign and rarely donates to candidates. He isn't part of the D.C. social network and has few close Capitol Hill or White House contacts.
GADGET FREAK   Home in Arlington, Va., is stuffed with state-of-the-art gizmos: PCs, large-screen TVs, stereos, video gear. More of a techie than his predecessors--and can't be without his Palm Pilot.
IDEA OF FUN   Loves barbecues with friends or time spent with his teenage daughter. Watches what he eats--recently lost more than 100 pounds.
CARS HE DRIVES   Takes the Jeep in foul weather but loves his Porsche. Grew up next to a dealership and has been smitten with the sports car ever since.
Data: BusinessWeek

By Dan Carney in Washington