By Clare Dyer and Gregory Palast for The Guardian UK
Millions of Britons could be in line for a refund if it is proved that they paid inflated prices for Microsoft’s all-pervasive software, ready installed in most computers on sale.
Next Monday 16 leading US law firms will file the billion pound suit on behalf of hundreds of millions of people who bought Microsoft Windows and programs outside the US.
The case, at the US district court in Maryland, will be the first big test of provisions in American law allowing non-US citizens to claim damages as victims of monopolies. Last week a district court in Washington ruled that Microsoft abused its monopoly status, and ordered the company to split into two.
The lawyers are members of the newly formed Global Anti-Cartel Network, an alliance of 29 law firms from six continents with plans to target other monopolies and price fixing conspiracies in courts throughout the world, to seek compensation for their victims. The price fixing has been dubbed the world’s “new piracy”.
The network says Microsoft has overcharged every Windows user by at least £20. It expects to recover up to half the purchase price of each of the several hundred million copies of Windows sold outside the US.
The European arm of the network is spearheaded by Michael Cover of Mishcon de Reya, the London law firm that handled the divorce of Diana, Princess of Wales and, after her death, the initial legal work for the trust set up in her memory.
The American contingent includes the nation’s top anti- trust lawyer, David Boies, who led the US justice department’s case against Microsoft.
Because he acts for the government in that case, Mr Boies cannot take part in the damages claim against Microsoft. Nor can Mishcon de Reya, because of certain client conflicts.
However, both firms are expected to play key roles in another network action: a lawsuit seeking several hundred million pounds from vitamin manufacturers.
In the US, Mr Boies’s firm and others have already recovered $1.1bn (£733m) for American victims of a vitamin price fixing conspiracy.
Last year, the Swiss pharmaceutical giant Hoffman-LaRoche pleaded guilty to criminal charges of leading a ring of companies secretly increasing the price of vitamins E and C worldwide.
Victims include not only consumers who buy a month’s supply of vitamin pills, but huge food companies that use vitamins to enrich their products.
US firms plan to cooperate with lawyers in other network countries to launch claims in courts outside the US. The network has held meetings in London in the past year, including one on genetically modified seeds with scientists and environmental organisations.
Michael Hausfeld, a Washington DC lawyer and one of the network’s leaders, said it planned to file an action over vitamins in Britain. If it succeeds, the claim will be the first to win damages in the British courts for consumers overcharged as a result of an illegal cartel.
Such claims are possible in British courts under European Union anti-trust law, but none has yet resulted in a damages award, according to Christopher Bright, a competition law specialist at Clifford Chance, Britain’s biggest law firm.
The Competition Act, which came into force in March, will allow compensation claims to be brought under English law, but the act is not retrospective.
The network is planning other actions in the US, Britain and elsewhere, including China, seeking recovery from record companies for allegedly overcharging for compact discs, and from makers of pigfeed additives for alleged price fixing.
Tonight the BBC’s Newsnight programme will reveal how the network plans to take on global cartels. It will show footage obtained from the FBI of a meeting of manufacturers of a pigfeed additive conspiring to fix prices, secretly filmed by undercover agents. Three of the conspirators have been jailed.
Mr Hausfeld’s firm is best known for its creative use of US and international law to force Volkswagen and other German companies to pay billions of dollars to settle claims by victims of Nazi slave labour and concentration camps.
“It’s the flip side to globalisation,” he said. “If you’re going to have globalised industry and globalised impact on industry, then you have to have a global means of uniformly responding to abuses of that globalisation.”
He described price fixing conspiracies as the new piracy.
He estimates that cases on which he has worked have returned over $10bn (£6.6bn) to people harmed by multinational corporate misconduct.
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Gregory Palast’s column “Inside Corporate America” appears fortnightly in the
Observer’s Business section. Nominated Business Writer of the Year (UK Press
Association – 2000), Investigative Story of the Year (Industrial. Society – 1999), Financial Times David Thomas Prize (1998).