Judge extends Microsoft oversight for two years

SEATTLE (Reuters) - A federal judge ruled on Tuesday to extend the U.S. government's antitrust oversight of Microsoft Corp <MSFT.O> for two more years, but stopped short of granting a five-year extension sought by states accusing the company of continuing monopolistic behavior.

District Judge Colleen Kollar-Kotelly said she will extend the government's oversight of Microsoft until November 12, 2009, two years after its original expiration date, due to delays by Microsoft in filing technical documents to software licensees.

The consent decree settled the landmark U.S. antitrust case against Microsoft in 2002. The decree covers the company's ties to computer makers, how its software works with other types of software and enforcement to ensure it does not repeat past practices.

The consent decree's expiration had been temporarily pushed back until January 31 while Kollar-Kotelly considered the motion filed by 10 states to extend government oversight of Microsoft.

The states, which include California and New York, wanted the decree extended until 2012, arguing that Microsoft would again use its market dominance to crush competitors once the decree expired.

Kollar-Kotelly wrote in her opinion that the extension should not be seen as a "sanction" against Microsoft, but she said the delays in documentation meant the objectives of the settlement had not been fully achieved.

She also left open the possibility that the decree could be extended in the future and said there are mechanisms in place to reexamine the decree in the fall of 2009.

"We will continue to comply fully with the consent decree," Brad Smith, Microsoft's general counsel, said in a statement. "We built Windows Vista in compliance with these rules, and we will continue to adhere to the decree's requirements."

Prior to the ruling, shares of Microsoft closed down 12 cents at $32.60 on the Nasdaq.

(Reporting by Daisuke Wakabayashi; Editing by Gary Hill)