WASHINGTON, April 27 -- Microsoft Corp. announced Thursday it remains committed to its $2 billion buyout of Intuit despite a suit by the U.S. Justice department challenging the deal. Microsoft Chairman Bill Gates said the merger is 'very clearly' in the interest of consumers. The Justice Department filed a suit Thursday in San Franciso challenging the software giant's purchase of Intuit Inc., maker of the popular personal financial software 'Quicken.' The deal probably would lead to higher prices and less innovation in the finance software market, according to the federal antitrust complaint. Unless a federal judge rules otherwise, the complaint would prevent Microsoft, headquartered in Redmond, Wash., and Intuit, headquartered in Menlo Park, Calif., from completing the deal. News of the suit drove shares of Microsoft down $1 to $78.625 a share in Nasdaq trading. Intuit lost $10.25 to $72.75 before trading was halted at 2 p.m. EDT. Microsoft and Intuit announced jointly they will seek a speedy trial of the suit. 'This merger is very clearly in the interest of consumers,' Gates said. 'Microsoft would gain critical human resources and management focus, and would contribute its expertise in ease of use to the future development of Intuit's products.' Gates noted that Microsoft has agreed to divest its Microsoft Money program to Novell Inc. in an effort to assuage antitrust concerns. 'Novell would gain a first-rate product to fill out its line of consumer products,' Gates said. 'Novell is a formidable competitor, and can ensure continued price and innovation competition.'
William H. Neukom, senior vice president for Microsoft, said the divestiture should have eliminated any concerns the Justice Department might have about the merger. 'We will vigorously contest the Justice Department's contrary position at trial,' he said. 'This merger would enable Intuit to pursue its mission of making it easier for consumers to make the best possible financial decisions based on delivery of unbiased financial information at their fingertips,' said Scott Cook, chairman of Intuit. The filing of the suit by the Justice Department comes three days after its attorneys appeared with Microsoft's to argue before an appeals court over a U.S. judge's rejection of the proposed antitrust settlement between Microsoft and the department. The department had reached the settlement with Microsoft last July, four years after starting an antitrust investigation, but U.S. District Judge Stanley Sporkin rejected the deal Feb. 14 by saying it was too lenient and not in the public interest. The Justice Department announced two days later it would appeal Sporkin's ruling and has accused Sporkin of overstepping his authority and interfering with the government's ability to enter into consent decrees with parties under antitrust investigation. The agreement between the department and Microsoft barred the computer software giant from imposing licensing restrictions on the computer manufacturers who purchase the company's operating system. The Justice Department asked Thursday for an injuction to block the Intuit deal. 'The effects of this proposed acquisition could reach well beyond today's PF/Checkbook Software Market,' the federal complaint said. 'The acquisition threatens harm to consumers in other important areas of commerce, especially the area of personal computer-based home banking,' the complaint said. '...Before the acquisition, Microsoft and Intuit had independent plans to compete in the field of electronic commerce...' Intuit's 'Quicken' is the leading personal finance software and the No. 1-selling personal software product, the department said, with a market share in 1994 of almost 70 percent and more than 7 million users. Microsoft's 'Money' is the No. 2 seller in the personal finance software market, with about a 22 percent 1994 market share and 1 million users. Personal finance software is used on personal computers to control financial records and transactions. Sales in the market reached nearly $90 million last year.