WASHINGTON — Joel I. Klein, the antitrust enforcer who made the decision to take on Microsoft Corp. and its billionaire Chairman Bill Gates in a landmark antitrust battle, announced Tuesday that he will resign by month's end.
The departure of the 53-year-old Klein was seen as potentially beneficial to the Redmond, Wash.-based software giant, which saw its shares climb $2, to close at $65, on Tuesday. The increase capped a broad rally of technology stocks that have largely stumbled since last spring, when U.S. District Judge Thomas Penfield Jackson sided with Klein and the Justice Department and ordered Microsoft to be split in two for violating antitrust laws.
Investors' optimism is shared by many legal experts, who also think Klein's departure is good for Microsoft, where the news was greeted with official silence.
With the Supreme Court due to decide as early as this month whether to take the landmark antitrust case on an expedited basis, observers believe Klein would have been a formidable advocate for the government's case. He is familiar with the high court--having helped shepherd Supreme Court Justice Stephen G. Breyer through his Senate confirmation process--and is known as an expert on appellate advocacy.
There was immediate speculation that Klein--who declined to say what he plans to do next--might be invited back to argue the government's case as a private lawyer hired on a contract basis.
"Joel Klein is second to none in his skills as an appellate advocate and he knows the case cold," said George Washington University law Professor William E. Kovacic.
Klein said that even if he had stayed, he had not planned to argue the case before the Supreme Court, deferring to the government's traditional high-court advocate, the solicitor general. Asked if he would accept a contract offer to argue the case, Klein declined to comment.
The government also may miss Klein's political skills, which helped keep the lid on the often combustible relationship between the Justice Department and the 19 states that brought the antitrust case against Microsoft.
Steven D. Houck, the states' former lead trial lawyer in the Microsoft case, said that although the states' relationship with the Justice Department is an "institutional one" that should survive a leadership change, Klein's departure could make any future out-of-court settlement even more difficult to achieve. "You may have them [the states and DOJ] going their separate ways," Houck said.
Todd Boyer, a spokesman for the Ohio attorney general's office that declined to side with the Justice Department and 17 other states in seeking a breakup of Microsoft, said, "[Klein] worked to maintain good federal-state relations in the antitrust arena, with Microsoft being the best-known case. It was largely a successful effort, despite the opposition he faced."
Atty. Gen. Janet Reno praised Klein's record as head of the antitrust unit. "He has always called them as he saw them, looking out for what's best for American consumers," Reno said.
Klein, whom some lawmakers had feared would go easy on Big Business, surprised many observers and elevated antitrust law to new prominence by successfully challenging some of the biggest names in commerce. As head of the Justice Department's antitrust division, Klein took on, among others, American Airlines, defense contractor Lockheed-Martin, major credit card companies and European vitamin giants.
Reno named Klein's deputy, A. Douglas Melamed, a 55-year-old graduate of Harvard Law School and former Georgetown University law professor, to replace him.
Klein said he would miss the Justice Department, but added that he had grown weary of a "job where you can't talk to anybody on the outside" for fear of breaking confidentiality rules.
But he quickly added that his departure is unlikely to affect the Microsoft case or the direction of federal antitrust enforcement, in general.
"These cases are institutional cases; I expect complete continuity," Klein said.
In a prepared statement, he said, "The time has come to seek new challenges. I have done what I set out to do here, and our work is on the right track."
Government ethics laws prohibit top officials from appearing before the government agency or department that employed them for at least one year. In addition, a White House executive order imposes additional post-employment restrictions, including a five-year ban on top officials lobbying their former agencies.
However, a spokesman for the Office of Government Ethics said that contract work on behalf of the Justice Department in the Microsoft case probably would not violate the rules. In any event, the spokesman said, the ethics laws provide for waivers that probably would permit the Justice Department to hire Klein to represent it in court.
But some close to Klein say he may walk away and never look back.
"I expect to see him in a law firm with a broad international presence that would allow him to continue to develop his work in international policy," said law professor Kovacic. "Bill Gates would regard this as a positive development because there was some enmity between the two men. [Gates] probably is pleased he doesn't have to deal with him again."