[Federal Register Volume 63, Number 6 (Friday, January 9, 1998)]
[Notices]
[Pages 1499-1508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-522]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. International Business Machines Corporation and
Storage Technology Corporation; Proposed Final Judgment and Competitive
Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in a civil
antitrust case, United States v. International Business Machines
Corporation and Storage Technology Corporation, Case Number 1:97 CV
03040.
On December 18, 1997, the United States filed a Complaint alleging
that an ``OEM Agreement'' between International Business Machines
[[Page 1500]]
Corporation )``IBM'') and Storage Technology Corporation (``STK'')
unlawfully restrains competition in the market for disk storage
subsystems (``DASD'') for mainframe computers, in violation of Section
1 of the Sherman Act, 15 U.S.C. 1. The proposed Final Judgment
prohibits IBM and STK from carrying out anticompetitive terms of the
OEM Agreement and imposes requirements to restore competition in the
market. A Competitive Impact Statement filed by the United States
describes the Complaint, the proposed Final Judgment, and remedies
available to private litigants.
The public is invited to comment to the Justice Department and to
the Court. Comments should be addressed to John F. Greaney, Chief,
Computers & Finance Section, U.S. Department of Justice, Antitrust
Division, 600 E. Street, N.W., Suite 9500, Washington, D.C. 20530
(telephone: (202) 307-6200). Comments must be received within sixty
days.
Copies of the Complaint, Stipulation, proposed Final Judgment, and
Competitive Impact Statement are available for inspection in Room 207
of the U.S. Department of Justice, Antitrust Division, 325 7th Street,
N.W., Washington, D.C. 20530 (telephone: (202) 514-2481), and at the
Office of the Clerk of the United States District Court for the
District of Columbia, 333 Constitution Avenue, N.W., Washington, D.C.
20001. Copies of these materials may be obtained from the U.S.
Department of Justice upon request and payment of a copying fee.
Rebecca P. Dick,
Director, Civil Non-Merger Enforcement.
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, that:
1. The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the District of Columbia.
2. The parties consent that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16), and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on the defendants and by filing that
notice with the Court.
3. The defendants shall abide by and comply with the provisions of
the proposed Final Judgment pending entry of the Final Judgment, and
shall, from the date of the filing of this Stipulation, comply with all
the terms and provisions thereof as though the same were in full force
and effect as an order of the Court.
4. In the event plaintiff withdraws its consent or if the proposed
Final Judgment is not entered pursuant to this Stipulation, this
Stipulation shall be of no effect whatever, and the making of this
Stipulation shall be without prejudice to any party in this or any
other proceeding.
Dated: December 18, 1997.
For Plaintiff, United States of America
John F. Greaney,
Chief, Computers and Finance Section, Antitrust Division, U.S.
Department of Justice, Bicentennial Building, 600 E Street, NW., Suite
9300, Washington, DC 20530, (202) 307-6122.
For Defendant, International Business Machines Corporation
Evan R. Chesler,
Paul C. Saunders (Bar No. 973388),
Cravath, Swaine & Moore, Counsel for Defendant International, Business
Machines Corporation, Worldwide Plaza, 825 Eighth Avenue, New York, NY
10019, (212) 474-1000.
For Defendant, Storage Technology Corporation
J. Edd Stepp, Jr.,
Phillip H. Rudolph (Bar No. 392189),
Gibson, Dunn & Crutcher LLP, Counsel for Defendant Storage, Technology
Corporation, 1050 Connecticut Avenue, NW., Washington, DC 20036-5306,
(202) 955-8500.
Disclosure Pursuant to Rule 108(K)
Pursuant to Rule 108(k) of the Local Rules of this Court, the
following is a list of all individuals entitled to be notified of the
entry of the foregoing Stipulation and of the entry of the proposed
Final Judgment:
John F. Greaney,
U.S. Department of Justice, Bicentennial Building, 600 E Street, N.W.,
Suite 9300, Washington, D.C. 20530, (202) 307-6122.
Evan R. Chesler,
Cravath, Swaine & Moore, Counsel for Defendant International Business
Machines Corporation, Worldwide Plaza, 825 Eighth Avenue, New York, NY
10019, (212) 474-1000.
J. Edd Stepp, Jr.,
Gibson, Dunn & Crutcher LLP, Counsel for Defendant Storage Technology
Corporation, 333 South Grand Ave., Los Angeles, CA 90071, (213) 229-
7000.
Final Judgment
WHEREAS, the United States of America, having filed its Complaint
herein on December 18, 1997, and the United States and Defendants, by
their respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law, and
without this Final Judgment constituting any evidence against or an
admission by any party with respect to any issue of fact or law;
And whereas, Defendants having agreed to be bound by the provisions
of this Final Judgment pending approval by the Court;
And whereas, the essence of this Final Judgment being prompt and
certain action to ensure that the OEM agreement referred to herein will
not substantially lessen competition in the development, production, or
marketing of DASD as hereinafter defined;
And whereas, Defendants having represented to Plaintiff that the
provisions of this Final Judgment can and will be accomplished;
Now, therefore, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law herein, and upon
consent of the parties hereto, it is hereby Ordered, adjudged, and
decreed as follows:
I. Jurisdiction
This Court has jurisdiction over each of the parties hereto and the
subject matter of this action. Venue is proper in this Court. The
Complaint states a claim upon which relief may be granted against the
Defendants under Section 1 of the Sherman Act (15 U.S.C. 1).
II. Definitions
A. IBM means International Business Machines Corporation, its
successors and assigns, each subsidiary and division thereof, and each
officer, director, employee, agency and other person acting for or on
behalf of any of them.
B. STK means Storage Technology Corporation, its successors and
assigns, each subsidiary and division thereof, and each officer,
director, employee, agent and other person acting for or on behalf of
any of them.
C. Defendants means, collectively or individually as the context
request, IBM and/or STK.
D. DASD means direct access magnetic disk storage subsystems
configured for attachment to IBM System 390 mainframe computers, any
future versions, models, or generations of IBM System 390 mainframe
computers (regardless of name or other product designation), and plug-
compatible mainframe computers, without regard to whether or not such
subsystems also attach to any other computer processor product. The
term ``DASD'' does not include parts of
[[Page 1501]]
subassemblies sold or shipped to repair or upgrade existing DASD
installations, and it does not include any used DASD.
E. STK DASD means any DASD product developed, manufactured, or
supplied by STK at any time prior to the expiration of this Final
Judgment, including but not limited to Iceberg, Kodiak, the products
marketed by IBM as RAMAC Virtual Array and RAMAC Scaleable Array, and
any future versions, models, or generations of any of the
aforementioned products (regardless of name or other product
designation). The term ``STK DASD'' does not include Virtual Storage
Manager, any future versions, models, or generations thereof
(regardless of name or other product designation), or any existing or
future STK Nearline storage products, or any used DASD.
F. Agreement means any agreement or understanding, whether written
or oral, formal or informal.
G. OEM agreement means the agreement dated June 7, 1996, pursuant
to which IBM has purchased STK DASD, including all attachments,
exhibits, schedules, and other documents referenced therein, and all
amendments, additions, updates, or modifications to any of the
foregoing.
H. Modified OEM agreement means the agreement dated December 18,
1997, pursuant to which IBM has agreed to purchase STK DASD from STK,
and STK has agreed to sell STK DASD to IBM, including all attachments,
exhibits, schedules, and other documents referenced therein, and all
amendments, additions, updates, or modifications to any of the
foregoing.
I. STK Minimum Means a number of terabytes of STK DASD determined
for a twelve-month period by multiplying the number of months before
January 1, 2000, included in such period by 10.5; multiplying the
number of months after December 31, 1999, included in the period by 16;
and adding the two products together. For example, the STK Minimum for
the period from October 1, 1998, through September 30, 1999, would be
126 terabytes (10.5 x 12), and the STK Minimum for the period from
October 1, 1999, through September 30, 2000, would be 175.5 terabytes
((10.5 x 3)+(16 x 9)).
J. Purchase means, in connection with IBM purchases of STK DASD, a
transaction in which IBM requires title to the STK DASD purchased,
other than a financing transaction that meets each of the following
conditions: (1) IBM Credit Corporation acquires title to STK DASD,
ordered by a customer from STK or an STK remarketer other than IBM, in
order to finance the STK DASD; (2) such STK DASD carries an STK logo
and conforms in appearance to other STK DASD sold by STK, or an STK
remarketer other than IBM, to non-IBM purchasers; (3) the price for the
STK DASD is negotiated between the customer and STK or an STK
remarketer other than IBM, without participation by IBM; (4) such STK
DASD is not installed on the customer's premises by IBM or any person
acting on its behalf; (5) warranty service, if any, for such STK DASD
is not provided by IBM or any person acting on its behalf; and (6) the
transaction if financed by other than IBM would be considered a sale by
STK under Section VI.A. of this Final Judgment. The term ``purchase''
does not include a transaction in which IBM may act as sales agent,
distributor, or other channel of distribution in which IBM does not
acquire title to the STK DASD.
K. Change of control means the acquisition by an entity of more
than 20 percent of the outstanding common shares of STK representing
the right to vote for STK's board of directors, the sale of all or
substantially all of the assets of the assets of STK, or any
consolidation, merger, or other reorganization of STK in which STK is
not the continuing or surviving corporation or pursuant to which shares
of such common stock would be converted into cash, securities, or other
property.
L. Derivative work means a work that is based on an underlying work
that would be a copyright infringement if prepared without the
authorization of the copyright owner of the underlying work, Derivative
works are subject to the ownership rights and licenses of others in the
underlying work.
III. Applicability
A. The provisions of this Final Judgment apply to the Defendants,
their successors and assigns, their subsidiaries, affiliates,
directors, officers, managers, agents, employees, attorneys and all
other persons in active concert or participation with any of them who
shall have received actual notice of this Final Judgment by personal
service or otherwise. Defendants and each person bound by this Final
Judgment shall cooperate in ensuring that the provisions of this Final
Judgment are carried out.
B. Each Defendant shall require, as a condition of the sale or
other disposition of all or substantially all of the assets used in its
business for developing, manufacturing and selling DASD that the
acquiring party or parties agree to be bound by the provisions of this
Final Judgment.
C. Nothing contained in this Final Judgment is or has been created
for the benefit of any third party, and nothing herein shall be
construed to provide any rights to any third party.
IV. Terms of IBM Purchases From STK
A. Defendants may enter into or carry out any agreement pursuant to
which IBM may in any manner distribute STK DASD, including any such
agreement pursuant to which IBM may act as sales agent, distributor, or
any other channel of distribution for STK DASD in which IBM does not
acquire title to the STK DASD to be distributed, provided that in each
such instance such agreement is not inconsistent with the provisions of
this Final Judgment. The volume of STK DASD distributed under any such
agreement, except in an agency agreement in which IBM acts only as
agent for the end-user customer, shall be included in IBM's and not
STK's volumes of terabytes computed pursuant to Section VI of this
Final Judgment. Where IBM acts as agent to procure the STK DASD for the
end-user customer and also finances the transaction, the STK DASD so
distributed shall also be included in IBM's and not STK's volumes of
terabytes computed pursuant to Section VI of this Final Judgment.
B. Defendants shall not make any changes to any of the terms of the
modified OEM agreement, or enter into any other agreement, that would
be inconsistent with any of the unexpired provisions of this Final
Judgment. Defendants shall provide to the Antitrust Division of the
United States Department of Justice written notice (or a copy) no later
than 15 business days after receipt by the Defendants' Contract
Administrators of any written amendment, executed by authorized
representatives of Defendants, of the following documents included
within the modified OEM agreement: the ``OEM Agreement Between IBM and
STK'' dated December 18, 1997; the ``IBM Developer Base Agreement;''
the ``Statement of Work'' referenced in the IBM Developer Base
Agreement; and the ``Description of Licensed Works'' (but not including
any exhibits, attachments, or schedules to such documents, or other
documents referenced in such documents).
C. Except to the extent set forth in this Final Judgment,
Defendants shall not enter into or carry out any agreement that: (1)
sets any IBM volume commitments, or provides for recovery payments or
liquidated damages from IBM as a consequence of IBM's failure to
purchase a certain volume of STK DASD; or (2) contains any provision
[[Page 1502]]
under which any IBM obligation to STK is contingent upon any level of
sales or shipments of STK DASD by STK to persons other than IBM.
D. Except to the extent set forth in this Final Judgment,
Defendants shall not enter into or carry out any agreement pursuant to
which IBM is bound to purchase any volume of STK DASD, or that contains
any provision requiring IBM to make payments for IBM's failure to
purchase a certain volume of STK DASD; provided, however, that IBM may
provide STK with non-binding monthly, quarterly, and/or 12-month
estimates, expressed in terabytes or other units of storage capacity,
of anticipated purchases of STK DASD, and IBM, subject to Section VI of
this Final Judgment, may become contractually obligated to purchase STK
DASD as follows: (1) On or after the 30th day before the beginning of a
calendar quarter, IBM may bind itself to purchase up to 80 percent of
its estimate of purchases for that quarter; (2) IBM may thereafter
issue binding purchase orders for deliveries within such quarter
without regard to the estimate; (3) to the extent that IBM's purchases
of STK DASD for a given quarter are less than IBM's estimate for that
quarter, IBM may bind itself to purchase during the subsequent quarter
some or all of the difference between IBM's estimated and actual
purchases from the prior quarter, in addition to up to 80 percent of
its estimate for the subsequent quarter; and (4) in the event of
termination or winding down of the modified OEM agreement, in the last
quarter in which IBM provides an estimate of purchases, IBM may issue
purchase orders for volumes to satisfy its future needs and such
volumes may be delivered in that quarter or subsequent quarters. IBM
shall issue purchase orders for STK DASD only to the extent that they
reflect IBM's actual intention to purchase and take delivery of the STK
DASD ordered. IBM shall purchase and pay for all STK DASD for which it
becomes contractually obligated pursuant to the foregoing provisions;
provided, however, that nothing in this Final Judgment shall preclude
IBM and STK, in the event of a bona fide dispute concerning IBM's
obligation to purchase or accept delivery of STK DASD under a purchase
order, or concerning whether or to what extent IBM is obligated to
purchase STK DASD under a specific binding estimate, from pursuing
their remedies at law or resolving the dispute in a commercially
reasonable manner.
E. Defendants: (1) May establish prices and volume discounts for
the purchase of STK DASD by IBM, provided, however, that such discounts
are based upon actual volumes of STK DASD and upgrades purchased,
rather than projected volumes, and may reflect credits obtained as a
result of STK's failure to meet on-time delivery, quality, or product
deliverable requirements; but (2) shall not enter into or carry out any
agreement in which any prices or other terms applicable to IBM's
purchases of STK DASD are contingent upon any prices or other terms
offered by STK to any prospective end-user customer for STK DASD.
F. If demand for STK DASD exceeds supply, Defendants shall not
enter into or carry out any agreement that favors allocation to IBM
over other purchasers if STK cannot meet delivery commitments. In all
such situations, STK will allocate production for shipment to IBM and
to other customers based upon the delivery dates requested in purchase
orders received by STK for STK DASD from IBM or other customers. For a
given date, STK will allocate production for shipment to IBM and to
other customers on a pro rata terabyte basis.
V. Licenses; Product Development
A. IBM shall grant STK licenses effective immediately to all
hardware and software developments and enhancements that have been
funded by IBM under the OEM agreement or modified OEM agreement or that
IBM is obligated to fund under the modified OEM agreement to Iceberg,
Kodiak, future versions or models thereof, IXFP, and Snapshot
(hereinafter, ``Funded Enhancements''), which shall be at least
equivalent in scope to the licenses set forth in Attachment A of this
Final Judgment.
B. STK may pay hardware and software royalties to IBM. For STK's
sales, shipments, licenses, or other distribution of STK DASD, hardware
upgrades or components therefor, and IXFP and Snapshot software to
persons other than IBM that are shipped or otherwise distributed prior
to April 1, 1999, royalties for Funded Enhancements and derivative
works thereof used with the following (but not including royalties for
customer service that include the right to install basic enhancements
and maintenance modifications, and software and microcode, other than
IXFP and Snapshot, distributed separately from hardware or major
enhancements or hardware that are not based on capacity) may not exceed
the amounts set forth below:
1. STK shall make a nonrefundable payment to IBM of $4 million
during 1998, payable in equal quarterly installments beginning January
1, 1998. This payment will initially be applied to any royalties that
become due under the modified OEM agreement for shipments before April
1, 1999. Unused portions of this payment that do not exceed $2 million
may be credited toward royalties due for shipments after March 31,
1999.
2. For sales, leases, licenses, or any other distribution by STK of
STK DASD, STK DASD hardware upgrades, or components to customers other
than IBM, STK may pay IBM up to: (a) $0.08 per megabyte through
December 31, 1998; and (b) $0.067 per megabyte from January 1, 1999,
through March 31, 1999;
3. For each copy of IXFP software licensed or otherwise distributed
by STK to customers other than IBM for use on STK DASD, STK may pay IBM
up to: (a) $5,400 through December 31, 1997; (b) $5,500 from January 1,
1998 through December 31, 1998; and (c) $3,000 from January 1, 1999,
through March 31, 1999;
4. For each copy of Snapshot software licensed or otherwise
distributed by STK to customer other than IBM for use on STK DASD, STK
may pay IBM up to: (a) $18,000 through December 31, 1998; and (b)
$10,000 from January 1, 1999, through March 31, 1999. Except as
provided above, STK may pay hardware and software royalties to IBM
under the provisions of the modified OEM agreement, including but not
limited to, to provision that beginning April 1, 1999, the royalties
for each STK DASD subsystem or controller sold, leased, licensed, or
otherwise conveyed by STK to customers other than IBM will not exceed
the lesser of $3,500 or five percent of the revenue received. Except as
otherwise provided in the modified OEM agreement with respect to a
change of control or termination for cause, all royalties will become
fully paid-up no later than (a) when the sum of all payments made by
STK on account of such royalties, including any portion of the initial
$4 million payment that can be credited to royalties after March 31,
1999, but excluding royalties paid under Section V.B.2., V.B.3., and
V.B.4. above, equals $18 million, or (b) on December 31, 2002,
whichever first occurs.
C. For the duration of the modified OEM agreement, IBM shall offer
to sell to STK IBM disk drives and IBM disk drive replacements for use
in STK DASD that IBM has assisted in enhancing or developing under the
OEM agreement, regardless of whether such STK DASD are shipped to other
customers, provided that IBM makes such disk drives generally
available. Such offers shall be made under terms
[[Page 1503]]
no less favorable to STK than IBM's standard non-price terms and
conditions, and at a price no greater than the average of the five
lowest prices paid by IBM's OEM customers who have committed to
purchase comparable quantities during the same calendar quarter.
D. The provisions of this Section V shall terminate on December 31,
2002.
VI. IBM Purchase Volumes
A. For each calendar year during the period January 1, 1999,
through December 31, 2002, IBM's total purchases of STK DASD (measured
in terabytes) for use in the United States shall not exceed 67 percent
of the volume of STK DASD (measured in terabytes) purchased by IBM
during the calendar year 1998 for use in the United States, unless (1)
STK has already shipped a total of at least the STK Minimum to STK's
United States customers other than IBM during the preceding 12 months,
or (2) IBM and STK obtain prior approval of the United States under the
provisions of section VI.B. below.
B. IBM may purchase STK DASD without regard to the limitation of
Section VI.A. above if approved by the United States Department of
Justice. The United States may approve such purchases upon the
submission of a written request to the Antitrust Division of the United
States Department of Justice, supported by both Defendants, and setting
forth the additional purchase volumes requested, the time period(s) for
which the additional purchases are requested, and the reasons and
circumstances related to the request. The United States will approve
the request if it concludes that notwithstanding STK's failure to
supply the STK Minimum to United States customers, IBM faces vigorous
competition from STK in the United States for the development,
production and marketing of DASD, and IBM's proposed additional
purchases would not substantially lessen that competition. The United
States will not unreasonably withhold approval, and if it does not deny
a request in writing setting forth the reasons for the denial within 30
days of submission, the request will be deemed approved. If the United
States denies a request, the Court may review the matter upon the
filing of an application by both Defendants. The Court may overrule a
denial by the United States of a request made before January 1, 2001,
only if Defendants establish that notwithstanding STK's failure to
supply the STK Minimum to United States customers, IBM faces vigorous
competition from STK in the United States for the development,
production and marketing of DASD, and IBM's proposed additional
purchases would not substantially lessen that competition. The Court
may overrule a denial by the United States of a request made on or
after January 1, 2001, only if Defendants establish either (1) that
notwithstanding STK's failure to supply the STK Minimum to United
States customers, IBM faces vigorous competition from STK in the United
States for the development, production and marketing of DASD, and IBM's
proposed additional purchases would not substantially lessen that
competition or (2) that because of technological advances, the entry of
new competitors, or otherwise, a material change has occurred since the
date of this Final Judgment in the competition in the United States for
the development, production and marketing of DASD, such that IBM's
proposed additional purchases would not substantially lessen such
competition.
C. The provisions of this Section VI shall terminate on December
31, 2002.
VII. Compliance Inspection
For the purposes of determining or securing compliance with the
Final Judgment and subject to any legally recognized privilege or
doctrine:
A. Duly authorized representatives of the Department of Justice,
upon written request of the Attorney General or of the Assistant
Attorney General in charge of the Antitrust Division, and on reasonable
notice to a Defendant made to its principal office, shall be permitted:
1. Access during regular office hours of Defendants to inspect and
copy all books, ledgers, accounts, correspondence, memoranda, and other
records and documents in the possession or under the control of
Defendants, who may have counsel present, relating to any matters
contained in this Final Judgment; and
2. Subject to the reasonable convenience of Defendants and without
restraint or interference from them, to interview or depose officers,
employees, and agents of Defendants, who may have counsel present,
regarding any such matters.
B. Defendants shall submit written reports with respect to matters
contained in this Final Judgment as follows:
1. On the 30th day after the beginning of each calendar quarter,
STK shall submit to the Antitrust Division of the United States
Department of Justice a written report setting forth: (a) The total of
IBM's purchases of STK DASD for use in the United States during the
preceding quarter, measured in terabytes; (b) the total of IBM's
distribution of STK DASD for use in the Untied States, through a means
of distribution in which IBM did not acquire title to the STK DASD,
during the preceding quarter, measured in terabytes; (c) the total of
IBM Credit Corporation's purchases of STK DASD bearing STK's logo for
use in the United States during the preceding quarter, measured in
terabytes; (d) the total of STK's shipments of STK DASD to United
States customers other than IBM pursuant to transactions in which IBM
ordered such STK DASD as agent for such customers, during the preceding
quarter, measured in terabytes; (e) the total of all other STK
shipments of STK DASD to United States customers other than IBM during
the preceding quarter, measured in terabytes.
2. Apart from the foregoing, upon the written request of the
Attorney General or of the Assistant Attorney General in charge of the
Antitrust Division made to Defendants' principal office, Defendants
shall submit such written reports, under other if requested, with
respect to any matters contained in this Final Judgment as may be
requested.
C. No information or documents obtained by the means provided in
this Section shall be divulged by a representative of the Department of
Justice to any person other than a duly authorized representative of
the Executive Branch of the United States, except in the courts of
legal proceedings to which the United States is a party (including
grand jury proceedings), or for the purpose of securing compliance with
this Final Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by
Defendants to Plaintiff, Defendants represent and identify in writing
the material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and Defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice
shall be given by Plaintiff to Defendants prior to divulging such
material in any legal proceeding (other than a grand jury proceeding)
to which a defendant is not a party.
VIII. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be
[[Page 1504]]
necessary or appropriate for the construction or carrying out of this
Final Judgment, for the modification of any of the provisions hereof,
for the enforcement of compliance herewith, and for the punishment of
any violations hereof.
IX. Termination
This Final Judgment shall expire on the fifth anniversary of the
date of its entry.
X. Public Interest
Entry of this Final Judgment is in the public interest.
United States District Judge.
Dated:
Attachment A
A. An STK Incidental Use License for any purpose.
B. For IKA Storage Systems, an STK Material Use License for any
purpose.
C. For products other than IKA Storage Systems, an STK Material Use
License for any purpose.
D. STK Incidental Use License means a nonexclusive, worldwide
license to use (1) the ideas, concepts, and techniques contained in,
(2) the structure, sequence and organization of, and (3) other
nonliteral aspects of IBM Materials and their Derivative Works. Such
license shall not include the right of STK to make a copy of any of the
IBM Materials or any Derivative Work thereof owned by IBM which is
substantially similar thereto and would constitute literal infringement
under applicable copyright law.
E. STK Material Use License means a nontransferable, nonexclusive,
worldwide, license to use, execute, reproduce, display, perform,
transfer, distribute, sublicense, and prepare Derivative Works, of the
IBM Materials and its Derivative Works. Such license includes the right
of STK to authorize others to do any of the above, and also applies to
associated audio and visual works. Except for the right to sublicense
STK subsidiaries pursuant to Section 11.0 of the IDA, the right to
sublicense under this definition is limited to granting sublicenses for
microcode which include terms and conditions substantially similar to
the STK Customer Agreement, to granting sublicenses for software other
than microcode under the terms and conditions that STK uses for similar
software of its own, and to granting sublicenses to third-party
maintainers under reasonable terms and conditions. Nothing in this
definition of STK Material Use License or elsewhere in the Modified OEM
Agreement shall be construed, subject to the payment of royalities due,
to prevent STK from distributing through OEMs other than IBM, Funded
Enhancements that are incorporated in STK DASD, provided that nothing
in the Final Judgment to which this definition is attached shall
obligate IBM to grant to obligate IBM to permit STK to grant rights
under such license to OEMs other than the right of STK to permit OEMs
to distribute Funded Enhancements contained in STK products. In the
event of a Change of Control, subject to the payment of royalties due
and the acquiring entity's agreement to be bound by the Modified OEM
Agreement, nothing in this license shall be construed to prevent the
acquiring entity from developing, producing, or marketing Funded
Enhancements incorporated in DASD.
F. Change of Control means the acquisition by an entity of more
than 20 percent of the outstanding common shares of STK representing
the right to vote for STK's board of directors, the sale of all or
substantially all of the assets of STK, or any consolidation, merger,
or other reorganization of STK in which STK is not the continuing or
surviving corporation or pursuant to which shares of such common stock
would be converted into cash, securities, or other property.
G. Derivative Work means a work that is based on a underlying work
that would be a copyright infringement if prepared without the
authorization of the copyright owner of the underlying work. Derivative
works are subject to the ownership rights and licenses of others in the
underlying work.
H. Funded enhancements means hardware and software developments and
enhancements that have been funded by IBM under the OEM agreement of
June 7, 1996 or the Modified OEM Agreement, or that IBM is obligated to
fund under the Modified OEM Agreement.
I. IBM means International business Machines Corporation, its
successors and assigns, each subsidiary and division thereof, and each
officer, director, employee, agent and other person acting for or on
behalf of any of them.
J. IBM Materials means deliverables funded in accordance with the
IBM Developer Agreement, attached as Exhibit 3 to the Modified OEM
Agreement.
K. IDA means the IBM Developer Agreement, attached as Exhibit 3 to
the Modified OEM Agreement.
L. IKA Storage Systems means Iceberg, Kodiak, and Arctic Fox
storage systems, as defined in the IDA Description of Licensed Work
(Attachment 2 to Exhibit 3 of the Modified OEM Agreement as
Attachment).
M. Modified OEM Agreement means the agreement dated December 18,
1997, pursuant to which IBM has agreed to purchase STK DASD from STK
and STK has agreed to sell STK DASD to IBM, including all attachments,
exhibits, schedules, and other documents referenced therein, and all
amendments, additions, updates, or modifications to any of the
foregoing.
N. STK means Storage Technology Corporation, its successors and
assigns, each subsidiary and division thereof, and each officer,
director, employee, agent and other person acting for or on behalf of
any of them.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files
this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On December 18, 1997, The United States filed a civil antitrust
complaint alleging that an ``OEM agreement'' dated June 7, 1996,
between International Business Machines Corporation (``IBM'') and
Storage Technology Corporation (``STK'') unreasonably restrained
competition in the United States and worldwide in the sale of disk
storage subsystems (``DASD'') for mainframe computers, in violation of
Section 1 of the Sherman Act (15 U.S.C. 1). Before entering into the
OEM agreement, IBM and STK competed with each other, and with only two
other major competitors, in the development, production, and marketing
of mainframe DASD in the United States and worldwide. With the OEM
agreement, however, IBM became STK's exclusive outlet for STK's
mainframe DASD products, thereby eliminating competition between them
for sales of mainframe DASD to end-users.
At the same time as it filed the Complaint, the United States also
filed a Stipulation and a proposed Final Judgment in settlement of the
suit. As described in greater detail below, the proposed that made the
OEM agreement an exclusive arrangement between IBM and STK, and will
provide positive incentives for STK to resume its position as an
independent competitor in the market.
The United States, IBM, and STK have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would
[[Page 1505]]
terminate this action, except that the Court would retain jurisdiction
to construe, modify, or enforce the provisions of the proposed Final
Judgment and to punish violations thereof.
II. Description of Events Giving Rise to the Alleged Violation
A. The Defendants and Mainframe DASD
IBM is incorporated in the State of New York and is headquartered
in Armonk, New York. IBM is by far the world's largest supplier of
mainframe computers and related products. For the year 1996, IBM posted
worldwide revenues of about $75 billion. In 1995, the last full year in
which the IBM and STK were separate competitors in the mainframe DASK
market, IBM had mainframe DASD sales of over $2 billion, representing
shipments of about 588 ``terabytc'' of data storage capacity. The
terabyte--equivalent to the amount of data that can be stored in
hundreds of millions of pages of paper--is a standard industry measure
of sales volume. In 1995, IBM sold 275 terabytes of mainframe DASD, for
over $1.2 billion, in the United States.
STK is a Delaware corporation headquartered in Louisville,
Colorado. STK reported total worldwide revenues of about $2 billion in
1996. STK's core businesses are computer data storage and retrieval
systems, especially those for mainframe computer systems. Other than
mainframe DASD, STK's major products are automated tape library storage
systems for mainframe computers, and it is the world's dominant
supplier of these tape systems. STK's 1995 worldwide sales of mainframe
DASD were over $300 million, representing shipments of about 155
terabytes. Its U.S. sales of mainframe DASD were about $190 million,
representing shipments of 100 terabytes.
DASD are computer data storage systems that utilize rotating
magnetic disks. As defined in the Complaint and proposed Final
Judgment, ``mainframe DASD,'' are DASD specifically designed to attach
to and operate with IBM's System 390 computers, predecessor and
successor models, and other manufacturers' IBM-plug-compatible
computers.\1\ As described in the Complaint, mainframe DASD perform
high-speed and high-capacity data storage and retrieval functions that
are essential to the operation of mainframe computers, which is turn
are commonly and widely used for mission-critical data processing by
business, educational, governmental, and other organizations throughout
the world.\2\
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\1\ These mainframe computers are distinguishable from other
computers in that they all operate with IBM mainframe computer
operating systems, principal examples of which are IBM's OS-390,
MVS, VSE, and VM operating systems. Some ``mainframe DASD'' attaches
to and operates with other types of computers as well.
\2\ Data search times measurable in milliseconds and high data-
transfer rates make DASD suitable for on-line transaction
processing, large volume batch processing, and other applications in
which rapid access to large amounts of data is important.
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B. The OEM Agreement
On June 7, 1996, IBM and STK entered into an OEM agreement pursuant
to which STK agreed to supply IBM, and IBM committee to purchase for
resale purposes, mainframe DASD products developed and manufactured by
STK.\3\ The parties agreed to extend the arrangement through the end of
1999, subject to terms for renewal. Before the OEM agreement, STK sold
its mainframe DASD products in direct competition with IBM's internally
developed and manufactured mainframe DASD products. Under the OEM
agreement, however, IBM became STK's exclusive outlet for its mainframe
DASD, and this relationship displaced the competition that had
previously existed between them.
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\3\ The OEM agreement was not subject to the prenotification
requirements of Sec. 7a of the Clayton Act, 15 U.S.C. 18a.
---------------------------------------------------------------------------
The OEM agreement required IBM to purchase certain minimum volumes
and to make substantial payments to STK if it failed to meet the
minimum purchases. The OEM agreement committed IBM to purchase annual
and quarterly minimum volumes of STK's DASD products. For each of the
years 1997 and 1998, IBM had to purchase minimum volumes of 710
terabytes, and thereafter, the parties were to negotiate new volume
terms. If IBM failed to purchase the minimum volumes, STK would be free
to terminate the agreement, and IBM would be obligated to pay
liquidated damages of $75 million for a termination based on IBM's
failure to meet the 1997 minimum volumes and $27 million for a
termination based on IBM's failure to meet the 1998 minimum volumes.
Under the OEM agreement, IBM was also required to pay STK
``recovery payments,'' which increased proportionately with lower
levels of purchases by IBM, but declined to zero as the purchases
approached 400 terabytes in 1996 and 1500 terabytes in 1997 and 1998.
For example, if IBM sold only the minimum 710 terabytes in 1997, it
would owe STK up to $60 million in recovery payments for falling 790
terabytes short of the 1500. These recovery payments also took into
account the proportion of IBM's total sales of STK's DASD products
versus IBM's sales of its own DASD, so that the higher the proportion
of STK products sold by IBM, the lower the recovery payments. The OEM
agreement also required IBM to contribute $100 million over three years
to help fund STK's on-going efforts and plans to improve the
performance and capabilities of its mainframe DASD products.
Although the OEM agreement did not expressly provide that IBM would
be STK's exclusive mainframe DASD distributor, it contained provisions
that made independent sales by STK so unattractive economically that it
gave IBM de facto exclusively. The OEM agreement provided that if STK
sold mainframe DASD to anyone other than IBM, IBM would be freed from
its purchase volume commitments, its obligation to make recovery
payments or pay liquidated damages upon failure to achieve those
commitments, and its duty to help fund STK's product development
programs--obligations that in total were worth hundreds of millions of
dollars to STK. Due to these prohibitive contractual consequences,
internal STK documents referred to STK sales of mainframe DASD to
anyone other than IBM as ``forbidden'' under the OEM agreement.\4\
Shortly after entering into the OEM agreement, STK stopped all efforts
to sell mainframe DASD to customers other than IBM; and STK became
completely dependent on its former competitor to sell STK mainframe
DASD to end-users.
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\4\ To protect STK in the event it unintentionally entered into
transactions that would trigger these severe financial penalties,
STK insisted that it be allowed to make up to 12 otherwise
``forbidden sales'' over the life of the agreement. Another
exception allowed STK to sell its mainframe DASD to others without
penalty so long as STK first sold it to IBM and then repurchased it
from IBM.
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C. The OEM Agreement Violates Section 1 of the Sherman Act
The Complaint alleges that the OEM agreement unlawfully restrained
competition in the mainframe DASD market in the United States and
worldwide, in violation of Section 1 of the Sherman Act. Mainframe DASD
is a relevant antitrust market because there are no substitute products
to which mainframe DASD purchasers would turn even if prices of
mainframe DASD were to increase substantially.\5\ The
[[Page 1506]]
OEM agreement greatly increased the level of concentration in a market
that was already highly concentrated. In 1995, the last full year in
which IBM and STK competed against each other, IBM had a worldwide
market share of about 36 percent (based on total shipments of about 558
terabytes), while STK's share was about 10 percent (shipments of about
155 terabytes). The Herfindahl-Hirschman Index, a standard measure of
market concentration, increased by 720 points, to a post-agreement
level of 3767, as a result of the OEM agreement.\6\ The reduction of
competition from the OEM agreement has not been alleviated by new entry
into the manufacture and marketing of mainframe DASD, and because such
new entry would be extremely difficult and time-consuming, it is
unlikely to occur in the foreseeable future.
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\5\ Although other types of data storage devices exist--for
example, tape, optical and electronic memory products--because of
performance or cost differences, none of these other products are
effective substitutes for DASD. Conversion to a non-mainframe
computer system is also not an effective way to substitute away from
mainframe DASD because of the substantial costs and risk of
switching to an alternative computer platform.
\6\ The HHI is well accepted as a measure of market
concentration. It is calculated by squaring the market share of each
firm competing in the market and then summing the resulting numbers.
For example, for a market consisting of four firms with shares of
thirty, thirty, twenty, and twenty percent, the HHI is 2600
(302 + 302 + 202 + 202 =
2600). The HHI takes into account the relative size and distribution
of the firms in a market and approaches zero when a market consists
of a large number of firms of relatively equal size. The HHI
increases both as the number of firms in the market decreases and as
the disparity in size between those firms increases. Markets in
which the HHI is between 1000 and 1800 are considered to be
moderately concentrated and those in which the HHI is in excess of
1800 points are considered to be highly concentrated. Transactions
that increase the HHI by more than 100 points in moderately
concentrated and concentrated markets presumptively raise antitrust
concerns under the Department of Justice and Federal Trade
Commission Horizontal Merger Guidelines (rev. 1997).
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The Complaint further alleges that the OEM agreement removed a
significant competitive force from the marketplace. STK had been the
low price bidder for numerous DASD sales, and IBM and STK products had
been the top two choices for many customers. Competition from STK had
contributed to the substantial erosion in prices of mainframe DASD in
the years immediately prior to the OEM agreement. In this marketplace
setting, the OEM agreement eliminated direct and significant
competition between IBM and STK and deprived mainframe DASD customers
of the benefits of that competition. As a consequence of the OEM
agreement, the rapid decline in the price of mainframe DASD eased, and
the parties' output of mainframe DASD fell below levels they had
projected prior to the agreement. Thus, the OEM agreement has been
anticompetitive and its violates Section 1 of the Sherman Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment bars IBM and STK from including in an
OEM agreement terms that would prevent STK from selling mainframe DASD
in competition with IBM. The modifications to the OEM agreement remove
the provisions that made the agreement a de facto exclusive
arrangement.\7\ As a result, STK will suffer no economic penalty if it
sells to customers other than IBM. The elimination of these
restrictions makes the relationship between IBM and STK non-exclusive,
and provides an incentive to STK to begin selling mainframe DASD as an
independent competitor. Furthermore, the proposed Final Judgment
creates additional incentives for STK to begin selling DASD
independently by limiting the amount of mainframe DASD that STK may
sell through IBM, unless STK sells significant amounts of mainframe
DASD on its own. The purpose of these limitations, which are described
in detail below, is to make it economically attractive for STK to seek
out business from customers other than IBM. In setting these
limitations, the proposed Final Judgment does not preclude STK sales
though IBM that may arise under a non-exclusive OEM arrangement between
them, but adds a positive incentive for STK to re-enter the mainframe
DASD market as a seller independent of IBM.
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\7\ See modified OEM agreement dated December 18, 1997, a
redacted copy of which is attached hereto as a determinative
document under the APPA. The redactions are necessary to avoid
disclosure of competitively sensitive information. An unredacted
copy will be made available to the Court upon request.
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Section IV of the proposed Final Judgment enjoins the
anticompetitive contractual arrangements that have prevented STK from
selling mainframe DASD independently of IBM. Except in limited
specified contexts common in normal supply contracts,\8\ Section IV
prohibits IBM and STK from entering into or maintaining any agreement
as to price, volume, or other terms that would be contingent upon
either the level of IBM's mainframe DASD purchases from STK, or the
level of STK's sales to customers other than IBM. The provisions of the
OEM agreement that imposed upon IBM minimum purchase commitments and
obligated it to pay recovery payments and liquidated damaged if those
commitments were not met, and that established contractual penalties to
STK for making mainframe DASD sales to customers other than IBM, are
prohibited by Section IV.
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\8\ The proposed Final Judgment allows IBM to provide STK with
monthly and quarterly forecasts of its purchases, in order to enable
STK to anticipate capacity requirements to fill IBM orders, while
imposing strict limits on the extent to which IBM may actually bind
itself to make purchases (Section IV.D.); permits IBM and STK to set
prices for IBM purchases that reflect volume-based discounts and any
credits obtained as a result of STK's failure to meet on-time
delivery, quality, or product deliverable requirements (Section
IV.E.); and allows STK to pay IBM specified unit based royalties for
its sales of DASD to other customers, which would enable IBM to
recover a portion of its investments in STK DASD product
improvements (Section V).
---------------------------------------------------------------------------
Section V of the proposed Final Judgment contains technology
licensing provisions designed to ensure that STK will not be prevented
from independently marketing mainframe DASD improvements that STK had
developed with IBM funding. These provisions require IBM to grant STK a
license to all mainframe DASD hardware or software product improvements
funded by IBM or for which it provided assistance under the OEM
agreement. The license is subject to STK's payment of reasonable
royalties, however, to allow IBM an appropriate return on its
contributions.
Section VI.A. of the proposed Final Judgment provides a positive
incentive for STK to compete against IBM, by requiring that STK must
sell DASD on its own as a condition of making unconstrained sales to
IBM. Under Section VI.A., beginning on January 1, 1999, IBM's U.S.
purchases from STK in a calendar year may not exceed 67 percent of
IBM's U.S. purchases in 1998, unless STK has shipped over the preceding
twelve months a substantial volume of mainframe DASD to U.S. customers
other than IBM. If STK fails to sell the specified amount to customers
other than IBM, it may make additional sales to IBM only if the parties
obtain prior approval from the United States pursuant to Section VI.B.
The United States will grant or deny such approval on the basis of
whether vigorous competition from STK has been restored, and whether
such competition would be substantially lessened as a result of
additional purchases by IBM. Section VI.B. also sets out a process and
standard for judicial review should IBM or STK contest a denial by the
United States.\9\
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\9\ The proposed Final Judgment imposes on Defendants the burden
of proof in such proceedings. For the period up to January 1, 2001,
the proposed Final Judgment permits the Court to overrule a denial
by the United States of a request for additional IBM purchases only
if Defendants establish that, notwithstanding STK's failure to
supply the STK Minimum to United States customers, IBM faces
vigorous and ongoing competition from STK in the United States for
the development, production and marketing of DASD, and IBM's
proposed additional purchases would not substantially lessen that
competition. Beginning on January 1, 2001, the proposed Final
Judgment expands the review criteria beyond whether STK is a
vigorous DASD competitor in the United States. Here, the proposed
Final Judgment also permits the Court to overrule a denial by the
United States if the Defendants establish that, because of
technological advances, the entry of new competitors, or other
material competitive changes, IBM's proposed additional purchases
would not substantially lessen competition in the United States in
the development, production or marketing of mainframe DASD.
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[[Page 1507]]
Other provisions of the proposed Final Judgment are also aimed at
fostering STK's competitive independence from IBM. Section IV.C.
prohibits IBM and STK from avoiding the proscriptions of the Judgment
by entering into a sales agency or distribution agreement that would
not entail actual IBM purchases of mainframe DASD. Section IV.D
restricts STK's reliance on IBM purchases by limiting the extent to
which IBM volume forecasts and purchase orders may become binding.
Section IV.E. limits the parties' ability to set IBM's prices on terms
other than actual amounts purchased. Section IV.F. requires STK to
allocate fairly production between the needs of IBM and that of other
STK customers in the event of supply constraints. Finally, Section V.C.
guarantees that IBM will continue to sell IBM disk drives used in STK's
mainframe DASD products, at competitive prices and terms, so long as
IBM makes such drives generally available to other purchasers.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act (15 U.S.C. 15) provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C.
16(a)), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the Defendants have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. The United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to entry. The comments and the response of the United States will be
filed with the Court and published in the Federal Register. Written
comments should be submitted to: John F. Greaney, Chief, Computers &
Finance Section, Antitrust Division, United States Department of
Justice, Suite 9500, 600 E Street, N.W., Washington, D.C. 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, proceeding to a full trial on the merits of its
Complaint. The United States is satisfied, however, that the relief
contained in the proposed Final Judgment should reestablish and
maintain viable and effective competition in the mainframe DASD market
that has otherwise been adversely affected by the OEM agreement. Thus,
the proposed Final Judgment will benefit competition substantially to
the same extent that the government could have obtained through
litigation, but avoids the time, expense and uncertainty of a full
trial on the merits of the government's Complaint, including the
uncertainty over whether a remedy imposed after a long delay would be
efficacious.
The United States also considered a claim for damages arising from
increased prices paid by the United States for its purchases of
mainframe DASD as a result of the reduction of competition caused by
the OEM agreement. However, calculation and proof of such damages to
the United States is likely to be complex and difficult, and the
litigation necessary to secure the damages would be costly and
protracted. During the pendency of the litigation, moreover, the OEM
agreement would remain in effect, depriving the United States and all
other mainframe DASD purchasers of the benefit of STK as an independent
competitive source of supply. Purchases by the United States constitute
only a modest percentage of all domestic DASD purchases. The United
States concluded, therefore, that the public interest is better served
overall by securing the immediate, certain, and substantial relief set
forth in the proposed Final Judgment.
VII. Determinative Documents
One determinative document within the meaning of the APPA--the IBM-
STK agreement dated December 18, 1997, which modifies the July 7, 1996,
agreement in conformity with the terms of the proposed Final Judgment--
was considered by the United States in formulating the proposed Final
Judgment. A redacted copy of this document is attached hereto, is being
filed with the Court, and will be available for public inspection.\10\
\10\ Certain confidential business information contained in the
modified OEM agreement, but not significant to consideration of the
proposed Final Judgment by the United States, has been redacted from
the filed and publicly available copies. Due to the length of the
modified OEM agreement, it will not be published in the Federal
Register.
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Dated: December 18, 1997.
Weeun Wang,
James J. Tierney,
Sanford M. Adler,
Richard I. Irvine,
Don Allen Resnikoff,
Molly L. DeBusschere,
J. Roberto Hizon,
Attorneys, Antitrust Division, U.S. Department of Justice, Computers &
Finance Section, Suite 9500, 600 E Street, N.W., Washington, D.C.
20530, (202) 307-6200.
United States Memorandum Regarding Antitrust Consent Decree
Procedures
The United States files this Memorandum to set forth the procedures
regarding entry of the proposed Final Judgment, pursuant to the
Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the
``APPA''). The APPA applies only to antitrust cases brought by the
United States.
1. On December 18, 1997, the United States filed a proposed Final
Judgment and a Stipulation between the plaintiff and defendant in which
both parties agreed to entry of the proposed Final Judgment.
2. The United States also filed a Competitive Impact Statement
relating to the proposed Final Judgment, pursuant to the APPA, 15
U.S.C. 16(b).
[[Page 1508]]
3. The APPA requires the United States to publish the proposed
Final Judgment and Competitive Impact Statement in the Federal Register
and in newspapers 60 days prior to entry of the Final Judgment. The
Notice will inform members of the public that they may submit comments
about the Final Judgment to the United States Department of Justice,
Antitrust Division.
4. The United States will consider any comments it receives,
respond to them, and publish the comments and responses in the Federal
Register.
5. Pursuant to the APPA, at the expiration of the 60-day period,
the United States will file with the Court the comments, its responses,
and a Motion For Entry of The Final Judgment, unless it withdraws its
consent to entry of the Final Judgment pursuant to Paragraph 2 of the
December 18 Stipulation.
6. When the United States files its Motion For Entry of The Final
Judgment, pursuant to the APPA the Final Judgment may be entered with
or without further hearing, if the Court determines that entry is in
the public interest.
Dated: December 18, 1997.
Weeun Wang,
James J. Tierney,
Sanford M. Adler,
Richard I. Irvine,
Don Allen Resnikoff,
Molly L. DeBusschere,
J. Roberto Hizon,
Attorneys, Antitrust Division, U.S. Department of Justice, Computers &
Finance Section, Suite 9500, 600 E Street, N.W., Washington, D.C.
20530, (202) 307-6200.
Certificate of Service
The undersigned certifies that he is a paralegal employed by the
Antitrust Division of the United States Department of Justice, and is a
person of such age and discretion to be competent to serve papers. The
undersigned further certifies that on December 18, 1997, he caused true
copies of:
1. Complaint;
2. Stipulation;
3. proposed Final Judgment;
4. Competitive Impact Statement;
5. Plaintiff's Memorandum Regarding Antitrust Consent Decree
Procedures;
and this certificate of service, to be served upon the persons at the
place and addresses stated below, which are the last known addresses:
Counsel for International Business Machines Corporation
Evan R. Chessler, Esq., Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, NY 10019 (by facsimile (212-474-3700) and
by overnight courier).
Counsel for Storage Technology Corporation
J. Edd Stepp, Jr., Esq., Gibson, Dunn & Crutcher 333 South Grand
Avenue Los Angeles, CA 90071 (by facsimile (213-229-6466) and by
overnight courier).
Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that
the foregoing is true and correct.
Executed at Washington, D.C. this ______th day of December,
1997.
J. Cory Allen,
Paralegal, Antitrust Division, U.S. Department of Justice, Computers &
Finance Section, Suite 9500, 600 E Street, N.W., Washington, D.C.
20530, (202) 307-6200.
[FR Doc. 98-522 Filed 1-8-98; 8:45 am]
BILLING CODE 4410-11-M