— By Peter Kaplan
WASHINGTON (Reuters) - A federal judge on Friday endorsed the antitrust settlement that Microsoft Corp. reached with the U.S. government and nine states a year ago, in a victory for the software giant that was cheered by investors.
U.S. District Judge Colleen Kollar-Kotelly rejected the alternative demands 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."
There was no immediate word on whether the nine states, which had rejected the settlement as too weak to stop Microsoft's illegal behavior, would appeal Kollar-Kotelly's decision.
Shares of Microsoft, which had been down ahead of word of the ruling, rose $1.74 to $54.74 in after hours trading.
An appeals court ruling in June 2001 upheld trial court findings that Microsoft had illegally maintained its Windows operating system monopoly, but rejected breaking the company in two. The case was then transferred to Kollar-Kotelly to determine the appropriate remedies in the case.
Microsoft reached the settlement with the Justice Department and nine states in November 2001 after Kollar-Kotelly urged the parties to reach an agreement.
The settlement gives computer makers greater freedom to feature rival software on their machines by allowing them to hide some Microsoft icons on the Windows desktop.
Microsoft is prohibited from retaliating under the settlement against those who choose non-Microsoft products. Nor could it enter into agreements that require the exclusive support of some Microsoft software.
Under the settlement, Windows will be sold under a standard license to the major computer makers, although discounts would still be allowed according to the volume of the order.
The nine states that declined to settle were California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia, plus the District of Columbia.
These non-settling states had asked for greater disclosure of Microsoft's code to allow rival software to work better with Windows.
They had also sought a version of Windows with removable add-on features to create opportunities for competing versions of features like Internet browsers and media players.
Microsoft has long argued the restrictions sought by the states would benefit rivals like AOL Time Warner and Sun Microsystems Inc., and would deprive consumers of a reliable platform for software.