[Federal Register Volume 63, Number 236 (Wednesday, December 9, 1998)]
[Notices]
[Pages 67920-67938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32147]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. General Electric Company and InnoServ 
Technologies, Inc., Civil Action No. 98-1744 (RCL)(D.D.C.); Response to 
Public Comments

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that Public Comments and the 
Response of the United States have been filed with the United States 
District Court for the District of Columbia in United States v. General 
Electric Company and InnoServ Technologies, Inc., Civil Action No. 98-
1744 (RCL)(D.D.C., filed July 14, 1998). On July 14, 1998, the United 
States filed a Complaint alleging that the proposed acquisition of 
InnoServ Technologies by General Electric would violate Section 7 of 
the Clayton Act, 15 U.S.C. Sec. 18. The proposed Final Judgment, filed 
at the same time as the Complaint, permits General Electric to acquire 
InnoServ but requires that General Electric divest InnoServ's PREVU 
diagnostic software used in the maintenance and repair of diagnostic 
imaging machines (e.g., CT Scanners, MRIs, x-ray machines).
    Public comment was invited within the statutory 60-day comment 
period. Such Comments, and the Responses thereto, are hereby published 
in the Federal Register and have been filed with the Court. Copies of 
the Complaint, Stipulation, proposed Final Judgment, Competitive Impact 
Statement, Public Comments and the Response of the United States are 
available for inspection in Room 215 of the Antitrust Division, 
Department of Justice, 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.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
director of Operations & Merger Enforcement, Antitrust Division.

Response To Public Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16(b)-(h) (``APPA'' or ``Tunney Act''), 
the United states hereby responds to the public comments received 
regarding the proposed Final Judgment in this case.

I. Background

    On July 14, 1998, the United States filed the Complaint in this 
matter, alleging that the acquisition by General Electric Company 
(``GE'') of InnoServ Technologies, Inc. (``InnoServ'') would violate 
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. Simultaneously with 
the filing of the Complaint, the United States filed a proposed Final 
Judgment and Stipulation signed by all the parties allowing for entry 
of the Final Judgment following compliance with the Tunney Act. A 
Competitive Impact Statement (``CIS'') was also filed with the Court 
and published in the Federal Register, along with the proposed Final 
Judgment, on July 24, 1998 (see 63 FR 39894).
    As explained more fully in the Complaint and CIS, GE, through its 
wholly owned subsidiary, General Electric Medical Systems (``GEMS''), 
is the largest manufacturer of medical imaging equipment, such as CT 
scanners and magnetic resonance imagers (``MRIs''), and is the leading 
service provider of GE imaging equipment. InnoServ, despite struggling 
financially for the last two years, was one of the nation's largest 
independent service organizations (``ISOs'') and had significant 
expertise and competed with GE in servicing certain GE imaging 
equipment. GE and InnoServ also competed in numerous local markets for 
comprehensive multi-vendor and asset-management services (``multi-
vendor service''). GE's acquisition of InnoServ was therefore likely to 
reduce competition substantially in two markets: (i) the market for 
servicing certain models of GE imaging equipment on a discrete, 
machine-by-machine basis; and (ii) the multi-vendor service market.
    The proposed Final Judgment permits GE to acquire InnoServ, which 
it did on September 16, but requires GE to divest promptly InnoServ's 
proprietary diagnostic software (called ``PREVU''). Diagnostic software 
is used by service engineers to calibrate, maintain, and service 
imaging equipment more quickly. InnoServ is one of the very few 
companies other than GE that developed its own proprietary diagnostic 
software for GE imaging equipment, and the United States concluded that 
it was primarily PREVU that had made InnoServ a good competitor to GE.
    The 60-day period for public comments expired on September 22, 
1998. As of today, the United States has received comments from two 
persons--Independent Service Network International (``ISNI''), which 
filed Comments and Supplemental Comments, and Star Technologies.\1\ The 
United States has carefully considered the views expressed in these 
comments, but nothing in these comments has altered the United States' 
conclusion that the proposed Final Judgment is in the public interest. 
Once these comments and this Response are published in the Federal 
Register, the United States will have fully complied with the Tunney 
Act and will then file a motion for entry of the proposed Final 
Judgment.
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    \1\ ISNI's initial Comments are attached as Appendix 1. The 
declaration of Claudia Betzner, ISNI's Executive Director, was 
submitted along with ISNI's initial Comments and is attached as 
Appendix 2. ISNI's Supplemental Comments are attached as Appendix 3. 
Star Technologies' Comment is attached as Appendix 4.
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II. Response to Public Comments

A. Initial Comment of Independent Service Network International

    ISNI, a trade association of 157 maintainers of high technology 
equipment, submitted two Comments. In its initial Comment, ISNI alleged 
that

[[Page 67921]]

the CIS failed to comply with the APPA because it did not include 
certain information that ISNI believes necessary for it to evaluate 
whether entry of the proposed Final Judgment is in the public interest. 
Specifically, ISNI requests: (i) A technical and economic assessment of 
PREVU; (ii) a more detailed description of the relevant markets alleged 
in the Complaint and the effect of the proposed Final Judgment on those 
markets; (iii) information about other companies, if any, that 
expressed an interest in purchasing InnoServ; and (iv) information 
relating to the relationship between the settlement of this case and 
the simultaneous settlement of another Antitrust Division case against 
GE involving medical imaging equipment, United States v. General 
Electric Co., No. CV-96-121-M-CCL (D. Mont., filed August 1, 1996) (the 
``Montana case''). ISNI also challenges the United States' assertion 
that there were no documents considered determinative in formulating 
the proposed Final Judgment (Appendix 1, ISNI Comment at 16), and 
requests that the Court order the production of numerous types of 
documents that ISNI believes ``must exist'' (id. at 17-18). ISNI 
requests that the Court allow it to intervene and argues that a special 
master should be appointed (id. at 18-19). ``At the very least,'' ISNI 
asserts, the Court should hold a hearing in which ISNI may reply to 
this Response (id. at 19).
    The United States responds to each of ISNI's specific requests in 
detail below. In order to put ISNI's Comments in context, however, we 
note initially that the essence of ISNI's concerns have nothing to do 
with either GE's acquisition of InnoServ or whether GE's divestiture of 
PREVU is in the public interest. Rather, ISNI's real aim is to convince 
this Court that GE has market power in various medical equipment and 
service markets, and that the United States should have challenged 
seven other transactions by GE in these markets dating back to 1994. 
(Appendix 1, ISNI Comment at 7-9). ISNI believes that the divestiture 
of PREVU will not resolve these competitive concerns, and therefore 
that GE should be compelled to license its own advanced diagnostic 
materials to ISNI's members and other service competitors (Appendix 1, 
ISNI Comment at 16).
    Whether GE's prior transactions were anticompetitive, and whether 
it would be procompetitive to have GE license its own software, are not 
germane to an assessment of whether entry of the proposed Final 
Judgment serves the public interest. The proper focus of a Tunney Act 
proceeding is on the proposed final judgment, and the court should not 
look beyond the complaint in the case before it ``to evaluate claims 
that the government did not make and to inquire as to why they were not 
made.'' United States v. Microsoft, 56 F.3d 1448, 1459 (D.C. Cir. 
1995). Nor does the APPA give a court authority to impose different 
terms on the parties.\2\
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    \2\ A court may decline to enter a proposed final judgment 
unless the parties accept certain conditions, see, e.g., United 
States v. American Tel. & Tel. Co., 552 F. Supp. 131, 225 (D.D.C. 
1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 
(1983), but if the parties do not agree to those conditions, the 
court's only choices are to enter the final judgment the parties 
proposed or leave the parties to litigate the case.
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    In this case, the United States concluded that the divestiture of 
PREVU would adequately remedy the antitrust violation alleged in the 
Complaint because it is PREVU, not GE's software, that would otherwise 
be eliminated from the market by this merger. While ISNI might believe 
that more competition would be created if GE had to license its 
software to INSI's members, the Tunney Act does not empower a court to 
reject a proposed final judgment based on beliefs that ``other remedies 
were preferable,'' Microsoft, 56 F.3d at 1460, or ``because a third 
party claims it could be better treated,'' id. at 1461 n.9.
    In making its public interest determination, ``the court's function 
is not to determine whether the resulting array of rights and 
liabilities is one that will best serve society, but only to confirm 
that the resulting settlement is within the reaches of the public 
interest.'' United States v. Western Elec. Co., 993 F.2d 1572, 1576 
(D.C. Cir. 1992) (emphasis added, internal quotation and citation 
omitted). The settlement embodied in the proposed Final Judgment is 
well within the reaches of this public interest standard.
1. InnoServ's PREVU Software
    ISNI's first request for additional information seeks a ``technical 
and economic evaluation'' of PREVU in order to demonstrate that its 
divestiture can establish a viable competitor in the relevant markets 
alleged in the Complaint. Specifically, ISNI argues that the United 
States must: (1) Provide a detailed description of PREVU; (ii) state 
whether anyone has licensed or purchased PREVU from InnoServ; (iii) 
state whether anyone has expressed an interest in licensing or 
purchasing PREVU from InnoServ; (iv) state whether PREVU helps InnoServ 
and potentially others to compete with GEMS and, is so, how; (v) 
compare the effectiveness of PREVU and the effectiveness of GEMS' 
advanced diagnostic software; and (vi) explain why it is not 
anticompetitive for GEMS to retain a non-exclusive license to use PREVU 
despite the fact that GE is not required to license its own advanced 
diagnostic software to competing service providers. (Appendix 1, ISNI 
Comment at 12).
    ISNI apparently believes that it needs this information to 
determine whether any potential purchaser of the PREVU package could in 
fact compete effectively with GE, given that InnoServ itself was 
struggling financially. ISNI asks, ``how will the divestiture of PREVU 
create an effective competitor when it was not able to make InnoServ an 
effective competitor?'' (id. at 11). Yet this argument is relevant not 
to whether the proposed Final Judgment is in the public interest but 
rather to whether the United States should have filed suit to challenge 
this acquisition at all. If, as ISNI seems to fear, InnoServ was unable 
to compete effectively with GE using PREVU, then GE's acquisition of 
InnoServ could not have substantially reduced competition. If, as the 
United States concluded, PREVU was regarded by some in the industry as 
an important competitive tool and that it made InnoServ a good 
alternative to GE for many customers, then the divestiture of PREVU 
will restore that competition and thus remedy the antitrust violation 
alleged in the Complaint.
    The United States have been investigating markets for servicing 
medical imaging equipment for several years, both in connection with 
this transaction and in the Montana case.\3\ Based on the evidence it 
has gathered in these matters, the United States determined that for 
more complicated types of imaging equipment, such as CT scanners and 
MRIs, diagnostic software such as GE's own software and InnoServ's 
PREVU allow service engineers to service and repair equipment much more 
quickly and efficiently. For that reason, ISOs that have access to 
diagnostic software for servicing imaging equipment have a competitive 
edge over those that do not. InnoServ was one of the very few ISOs that 
had developed advanced diagnostic software designed to be used to 
service GE imaging equipment. Although PREVU is not as fast or 
sophisticated as GE's own diagnostic software, it made

[[Page 67922]]

InnoServ's engineers more efficient than they would have been without 
any software at all. Thus, the United States concluded that PREVU gave 
InnoServ a competitive advantage over other ISOs and made it an 
effective competitor to GE. The United States also concluded that PREVU 
was sufficiently important to InnoServ's competitiveness that GE's 
divestiture of PREVU would offset to a large extent the competitive 
harm flowing from the merger.
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    \3\ As explained in more detail in Section II(A)(4), the Montana 
case involved a challenge to restrictions GE had imposed on over 500 
hospitals that had licensed its advanced diagnostic software used to 
maintain GE imaging equipment. These restrictions prevented the 
hospital licensees from competing with GE to service third-party 
medical equipment.
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    The fact that PREVU is not as sophisticated or efficient as GE's 
own software does not mean that InnoServ was not an effective 
competitor, that the proposed Final Judgment is not in the public 
interest, or that this Court must insist that GE license its own 
software. PREVU made InnoServ a closer competitor to GE than it would 
have been without any diagnostic software at all. InnoServ was able to 
compete with GE by, among other things, offering service at lower 
prices than GE offered. The proposed Final Judgment need only address 
the anticompetitive effects flowing from the merger. It does so by 
requiring GE to divest PREVU, which will enable its purchaser to 
compete as effectively as InnoServ did against GE.
    Because the United States' conclusions concerning PREVU's 
competitive significance were based on its evaluation of customer 
demand for the services InnoServ offered, not a technical comparison 
between PREVU and GE's software, providing the ``detailed description'' 
of PREVU requested by ISNI would not facilitate evaluation of the 
proposed Final Judgment. To the extent ISNI seeks such a description to 
enable its members to determine whether they are interested in 
purchasing PREVU, they may obtain it directly from GE. The proposed 
Final Judgment obligates GE to provide the kind of information about 
PREVU ``customarily provided in a due diligence process'' to all bona 
fide prospective purchasers. (Proposed Final Judgment para. IV(C)).
    ISNI also requests information about whether others have purchased 
or licensed PREVU from InnoServ, or have expressed an interest in doing 
so. Prior to this transaction, InnoServ offered to license PREVU, in 
conjunction with a parts contract, to hospitals and other equipment 
owners wishing to service their own equipment. At least 15 InnoServ 
customers elected to license PREVU in this way. Since GE's acquisition 
of InnoServ, more than a dozen entities have expressed to GE some 
interest in the possible purchase of PREVU pursuant to the proposed 
Final Judgment. GE is currently negotiating with some of these 
companies regarding such a purchase.
    Finally, ISNI requests an explanation of why it is not 
anticompetitive for GEMS to retain a non-exclusive license to use 
PREVU. The proposed Final Judgment permits GE to retain a license to 
use PREVU under very limited conditions: (i) to fulfill InnoServ 
service contracts in effect on the date GE acquired InnoServ; (ii) in 
connection with fulfilling any service contracts resulting from written 
proposals made by InnoServ to prospective customers that were 
outstanding on that date, provided that any such contract is entered 
into within 90 days thereafter; and (iii) in connection with fulfilling 
any renewals of any service contracts described in (i) or (ii), so long 
as the renewal was entered into prior to any sale of PREVU by GE or a 
trustee. (Proposed Final Judgment para. IV(E)). GE's license to use 
PREVU under these limited conditions expires, for each such service 
contract, on the expiration date of the contract in effect on the date 
that PREVU is sold. (Id.). These provisions were included in the 
proposed Final Judgment solely for the convenience of any InnoServ 
customers who want to continue to have their equipment serviced with 
PREVU. Requiring GE to stop using PREVU before it is divested would 
deny those customers their preferred service option without promoting 
competition.
2. The Relevant Markets
    ISNI contends that additional information must be provided about 
the relevant markets alleged in the Complaint in order to determine the 
effect of the proposed Final Judgment on those markets. It requests, at 
a minimum, information relating to how these markets were defined, the 
structure of these markets, the number of firms competing in them, the 
market share of each such firm, and an analysis of the effect of the 
proposed Final Judgment on price, output, consumer choice, and product 
quality (Appendix 1, ISNI Comment at 13).
    The detailed information about market definition and structure that 
ISNI has requested will not assist the Court in evaluating whether GE's 
divestiture of PREVU will ameliorate the anticompetitive effects of its 
acquisition of InnoServ. The number of firms competing in each market, 
and each firm's market share, are relevant only to assessing the 
competitive effects of the acquisition itself. The issue of whether the 
United States should have filed a lawsuit in the first place is not 
before the court in a Tunney Act proceeding. Under the proposed Final 
Judgment, the acquirer of PREVU will be free to offer service 
throughout the United States, and the structure of each market is 
therefore not important to understanding how the proposed Final 
Judgment will affect competition in that market.
    Moreover, the thirteen paragraphs in the Complaint devoted to 
market definition and anticompetitive effects (Complaint Paras.  9-19) 
provide sufficient information for industry participants such as ISNI 
to comment on the adequacy of the proposed Final Judgment. The 
Complaint alleges that the sale of service for each model of medical 
imaging equipment is a separate product market (id. para. 12) and that 
the geographic markets are local, with the precise boundaries differing 
depending on the type of equipment involved and other factors (id. 
para. 17). Prior to its acquisition by GE, InnoServ engineers were 
servicing approximately 13 different models of GE CT scanners and 6 
models of GE MRIs, in addition to several other types of GE imaging 
equipment (for example, ultrasound, cath lab, and mammography 
machines). InnoServ offered service within a 100-mile radius of 36 
metropolitan areas. Therefore, there are over 650 markets potentially 
affected by this acquisition. To answer each of ISNI's sweeping 
requests for each of these markets would be burdensome and effectively 
require the United States to do much of the work it would have had to 
do if it were litigating this case. One of the major benefits of 
antitrust consent judgments is that they enable the government ``to 
reallocate necessarily limited (enforcement) resources,'' Microsoft, 56 
F.3d at 1459, a benefit that would be lost if the United States were 
forced to compile and disclose this kind of information during a Tunney 
Act proceeding.
3. Alternative Purchasers of InnoServ
    ISNI also requests information about companies other than GE, if 
any, that expressed an interest in acquiring InnoServ. Specifically, it 
asks the United States to identify any such companies, to state whether 
there was an appraisal conducted by a third party of the value of 
InnoServ or PREVU, and to state how long InnoServ was on the market. 
This information is necessary, in ISNI's view, to determine whether 
there was a serious suitor of InnoServ that would have been a 
preferable purchaser from the standpoint of the antitrust laws but that 
lost to GE in a bidding war (Appendix 1, ISNI Comment at 14-15).
    ISNI fails to explain what relevance this information could have to 
an

[[Page 67923]]

evaluation of whether the proposed Final Judgment is in the public 
interest. Such information could be relevant if the United States had 
elected not to challenge the transaction on the grounds that the 
parties had met the stringent criteria of the failing company 
defense.\4\ But they did not, and the United States did not rely on 
such a defense in electing to file its Complaint and agreeing to the 
proposed Final Judgment. Thus, the information ISNI seeks is irrelevant 
to the issue before the Court.
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    \4\ Under the failing company defense, an otherwise 
anticompetitive merger does not violate the antitrust laws if one 
party faces the ``grave probability of business failure,'' would not 
be able to reorganize successfully under Chapter 11 of the 
Bankruptcy Act, has made unsuccessful good-faith efforts to elicit 
reasonable alternative offers from competitively-preferable 
purchasers, and absent the acquisition, the assets of the company 
would exit the relevant market. United States v. Greater Buffalo 
Press, Inc., 402 U.S. 549, 555 (1971); Citizen Publishing Co. v. 
United States, 394 U.S. 131, 136-37 (1969); U.S. Department of 
Justice and Federal Trade Commission, Horizontal Merger Guidelines 
Sec. 5.1 (issued April 2, 1992), reprinted in 4 Trade Reg. Rep. 
(CCH) para. 13,104 (1992) and 57 Fed. Reg. 41,552 (1992). During the 
course of its investigation, the United States did review InnoServ's 
finances and its attempts to sell the company, but ultimately the 
decision to accept the proposed Final Judgment was not based on 
issues relating to the failing firm defense.
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4. The Montana Case
    The United States noted in the CIS that, ``[i]n conjunction with 
this settlement, GE has also agreed to consent to all of the relief 
that the government was seeking in (the Montana case).'' ISNI requests 
additional information about the proposed Final Judgment reached in the 
Montana case. It cites GE's press release announcing the resolution of 
these two cases, in which it stated that ``[t]o obtain clearance to 
complete the InnoServ transaction, G.E. Medical Systems agreed to 
settle (the Montana case)'' (Appendix 1, ISNI Comment at 15). It asks 
for supporting evidence or explanation of statements in the CIS that 
``[t]he United States evaluated the merits of the settlement proposals 
in each case independently, concluding that the proposed settlement of 
this case is in the public interest for the reasons stated herein, and 
that the proposed settlement of the Montana case is in the public 
interest for the reasons stated in the Competitive Impact Statement 
filed in that case today'' (id.). Finally, ISNI suggests that 
statements in the Montana CIS demonstrate that the relief in this case 
is not adequate and that the United States should have sought mandatory 
licensing of GE's own diagnostic software (id. at 16).
    In the Montana case, filed in 1996, the United States challenged 
restrictions GE had imposed on over 500 hospitals that had licensed its 
advanced diagnostic software used to maintain and repair GE imaging 
equipment. These restrictions prevented hospital licensees from 
competing with GE to service any kind of medical equipment--whether 
manufactured by GE or another company--at other hospitals and clinics. 
Because GE's software was designed to be used on specific models of GE 
imaging equipment, the United States alleged that these anticompetitive 
restraints were not ancillary to GE's legitimate right to protect its 
intellectual property from misuse. As stated in the CIS in the Montana 
case, see 63 FR 40737 (July 30, 1998), the proposed Final Judgment in 
that case secures all of the relief that the United States was seeking 
by requiring GE to void the restrictive provisions in its existing 
licenses and commit not to impose such restrictions in the future. By 
eliminating these agreements not to compete from GE's licenses, the 
proposed Final Judgment in the Montana case will allow over 500 
hospitals across the country to service third-party medical equipment 
if they so wish.
    The United States evaluated the merits of this settlement and the 
Montana settlement independently and concluded that each was in the 
public interest. In the Montana case, the settlement provided all of 
the relief that the United States had been seeking from GE. In this 
case, the United States concluded that GE's divestiture of PREVU would 
adequately address the anticompetitive effects of its acquisition of 
InnoServ because it ensured that the PREVU software could remain in the 
marketplace. The simultaneous settlement of the two cases makes sense 
because the markets affected by the anticompetitive conduct challenged 
in the two cases overlap to some extent.\5\ GE had been contesting the 
Montana action for more than two years. Its willingness to settle that 
litigation on the government's terms--regardless of GE's public 
explanation for doing so--advanced the public interest by allowing 
hospitals to service third-party medical equipment. That same relief 
also could help ameliorate some of the competitive effects of the 
InnoServ transaction. In these circumstances, the United States and GE 
agreed to settle both cases at the same time.
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    \5\ The agreements challenged in the Montana case had their 
greatest anticompetitive effects in more rural areas, where the 
licensee hospitals were likely to be among the few, if not only, 
potential competitors to GE. In contrast, InnoServ tended to compete 
mostly within a 100-mile radius of larger metropolitan areas 
(Complaint para. 18). Nevertheless, there was at least some overlap 
in the geographic markets affected by the two cases.
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    ISNI cites the Montana CIS to support its arguments that PREVU is 
inferior to GE's software, that a purchaser of PREVU will not be able 
to compete effectively with GE, and that the United States should have 
insisted that GE license its advanced diagnostic software to ISOs such 
as ISNI's members. PREVU is not as sophisticated or efficient as GE's 
own software, but hat fact is irrelevant to the issue of whether the 
proposed Final Judgment is in the public interest. The United States 
concluded that PREVU made InnoServ a more effective alternative to GE. 
The proposed Final Judgment need only address the anticompetitive 
effects flowing from the merger, and it does so by requiring GE to 
divest PREVU to a purchaser that, in the United States' judgment, has 
the ``managerial, operational, and financial capability to compete 
effectively.'' (Proposed Final Judgment para. IV(B)). Requiring GE to 
license its own software might well create more competition than 
existed in the market prior to the InnoServ transaction. But the relief 
in this case need only address the anticompetitive effects flowing from 
the merger challenged in the Complaint; it need not create more 
competition than existed prior to GE's acquisition. The software that 
would otherwise be eliminated from the market by this merger is PREVU, 
not GE's software, so requiring GE to divest PREVU is clearly relief 
that is in the public interest.
    The Complaint in this case challenged GE's acquisition of InnoServ, 
not its longstanding policy of not licensing its own software to ISOs. 
ISNI ``would have it be otherwise, but [does not] have the power to 
force the government to make that claim. And since the claim is not 
made, a remedy directed to that claim is hardly appropriate.'' 
Microsoft, 56 F.3d at 1460.
5. There Are No ``Determinative'' Documents
    ISNI characterizes as ``incredible'' the CIS's statement that there 
were no determinative materials or documents within the meaning of the 
APPA that were considered in formulating the proposed Final Judgment. 
It argues that the Court should order the United States to produce 
certain documents that ISNI believes ``must exist'': documents 
providing the good-faith basis for the filing of the Complaint; third-
party analyses or evaluations of InnoServ and/or PREVU; documents 
relating to the efforts of others, if any, to acquire InnoServ; 
documents supporting

[[Page 67924]]

conclusory statements in the CIS regarding how the divestiture of PREVU 
will increase competition; and documents comparing PREVU to GE's own 
advanced diagnostic materials. (Appendix 1, ISNI Comment at 16-18).
    The Tunney Act requires, in pertinent part, that the United States 
make available to the public copies of the proposed Final Judgment 
``and any other materials and documents which the United States 
considered determinative in formulating such proposal.'' 15 U.S.C. 
Sec. 16(b) (emphasis added). Thus, the United States is required to 
disclose only those documents that the United States considered 
determinative in its decision to settle the case on the terms set forth 
in the proposed Final Judgment. Documents that were determinative in 
the decision to file the case need not be disclosed. During Senate 
hearings on the Tunney Act, one witness specifically urged that ``as a 
condition precedent to * * * the entry of a consent decree in a civil 
case * * * the Department of Justice be required to file and make a 
matter of public record a detailed statement of the evidentiary facts 
on which the complaint * * * was predicated.'' \6\ Congress, however, 
rejected that recommendation. ISNI's broad request for the documents 
providing the good-faith basis for filing the Complaint is contrary to 
the plain language of the Tunney Act and its legislative history and 
should be denied.
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    \6\ The Antitrust Procedures and Penalties Act: Hearings on S. 
783 and S. 1088 Before the Subcommittee on Antitrust and Monopoly of 
the Senate Judiciary Committee, 93d Congress., 1st Sess. 26, 57 
(1973) (prepared statement of Maxwell M. Blecher, attorney).
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    ISNI's other requests similarly fall outside the scope of what 
courts have interpreted to be determinative documents. Just last year, 
the United States Court of Appeals for the District of Columbia 
Circuit, in a case brought by the Antitrust Division challenging 
certain portions of the American Bar Association's law school 
accreditation activities, held that a third party was not entitled to a 
wide range of documents in the government's files. Massachusetts School 
of Law at Andover, Inc. versus United States (``MSL''), 118 F.3d 776 
(D.C. Cir. 1997). In that case, the United States asserted that the 
determinative documents provision referred ``only to documents, such as 
reports to the government, `that individually had a significant impact 
on the government's formulation of relief--i.e., on its decision to 
propose or accept a particular settlement.' '' Id. at 784. The court 
held that both the statutory language and the legislative history 
supported this interpretation. Indeed, the court noted that during the 
Senate debate on the Tunney Act, Senator Tunney himself cited a report 
to the government by an outside expert analyzing the economic 
consequences of proposed relief in an earlier case as exemplifying a 
``determinative document.'' Id.\7\ The Court also considered a broad 
disclosure requirement to be inappropriate because it would directly 
interfere with the United States' ability to negotiate settlement 
agreements. Id. at 784-85. Similarly, in another recent Antitrust 
Division case the Second Circuit held that ``the range of materials 
that are `determinative' under the Tunney Act is fairly narrow'' and 
that only documents that were ``a substantial inducement to the 
government to enter into the consent decree'' should be subject to 
disclosure. United States versus Bleznak, et al., 153 F.3d 16, 20-21 
(2d Cir. 1998).\8\
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    \7\ Congress enacted the Tunney Act in response to consent 
judgments entered in 1971 in three cases involving acquisitions by 
International Telephone and Telegraph Corporation (``ITT''), 
including that of the Hartford Fire Insurance Company. The consent 
judgments permitted ITT to retain Hartford. Subsequent Congressional 
hearings revealed that the Antitrust Division had employed Richard 
J. Ramsden, a financial consultant, to prepare a report analyzing 
the economic consequences of ITT's possible divestiture of Hartford. 
Ramsden concluded that requiring ITT to divest Hartford would have 
adverse consequences on ITT and on the stock market generally. Based 
in part on the Ramsden Report, the United States concluded that the 
need for the divestiture of Hartford was outweighed by the 
divestiture's projected diverse effects on the economy. In 
explaining the determinative documents provision, Senator Tunney 
stated, ``I am thinking here of the so-called Ramsden memorandum 
which was important in the ITT case.'' 119 Cong. Rec. 24,605 (1973).
    \8\ The single case cited by INSI--United States versus Central 
Contracting Co., 537 F. Supp. 571 (E.D. Va. 1982)--has not been 
followed by any other court. Moreover, even that opinion recognized 
that the Tunney Act ``does not require full disclosure of Justice 
Department files, or grand jury files, or defendant's files, but it 
does require a good faith review of all pertinent documents and 
materials and a disclosure of'' those ``material and documents that 
substantially contribute to the determination [by the government] to 
proceed by consent decree * * *.'' Id. at 577.
---------------------------------------------------------------------------

    ISNI has given no reason to doubt the United States' assertion that 
there are no determinative documents in this case. The United States 
did not receive any expert reports concerning the effects of requiring 
GE to divest PREVU, and there are no documents that constituted a 
substantial inducement to the United States to enter into the proposed 
Final Judgment. The decision to settle on these terms was based on an 
assessment of the importance of diagnostic software generally and of 
PREVU specifically, and there is no document that had a determinative 
impact on that assessment.
6. The Court Should Deny ISNI's Request To Intervene and To Appoint a 
Special Master
    ISNI requests this Court to permit it to intervene to aid the Court 
in its public interest determination (Appendix 1, ISNI Comment at 3, 
18-19). In order to intervene in this case, ISNI must first file a 
motion with this Court and upon each party to this action.\9\ If it 
does so, the United States will respond fully to that motion. From its 
informal intervention request, however, it appears that ISNI should not 
be granted intervenor status.
---------------------------------------------------------------------------

    \9\ Fed.R.Civ.P. 24(c) states that ``[a] person desiring to 
intervene shall serve a motion to intervene upon the parties as 
provided in Rule 5. The motion shall state the grounds therefor and 
shall be accompanied by a pleading setting forth the claim or 
defense for which intervention is sought.''
---------------------------------------------------------------------------

    ``The general rule * * * has been that private parties will not be 
allowed to intervene in government antitrust litigation.'' 7C Wright, 
Miller and Kane, Federal Practice and Procedure 2d Sec. 1908 at 266 
(1986). In this District alone, applications for intervention have been 
denied in several Tunney Act cases. United States versus The Thomson 
Corp., et al., 1996-2 Trade Cas. (CCH) para.71,620, 78,386 (D.D.C. 
1996); United States versus Microsoft Corp., 159 F.R.D. 318, 328 
(D.D.C.), rev'd on other grounds, 56 F.3d 1448 (D.C. Cir. 1995); United 
States versus Airline Tariff Publ'g Co., 1993-1 Trade Cas. (CCH) 
para.70,191, at 69,894 (D.D.C. 1993); United States versus Stroh 
Brewery Co., 1982-2 Trade Cas. (CCH) para.64.804, at 71,959-61 (D.D.C. 
1982); United States versus American Tel. & Tel. Co., 1982-2 Trade Cas. 
(CCH) para.64,726, at 71,524-26 (D.D.C. 1982).
    The eligibility requirements for intervention are the same in a 
Tunney Act proceeding as in any other case and are set forth in Rule 24 
of the Federal Rules of Civil Procedure. 15 U.S.C. Sec. 16(f)(3)(in 
making public interest determination, court may authorize 
``intervention as a party pursuant to the Federal Rules of civil 
Procedure''); MSL, 118 F.3d at 780 n.2 (11the Tunney Act looks entirely 
to Fed.R.Civ.P.24 to supply the legal standard for intervention''). A 
third party may be granted intervention either as ``of right'' under 
rule 24(a) or ``permissive[ly]'' under Rule 24(b). ISNI's request does 
not meet the standards under either provision.
    To intervene as of right, ISNI must show that it has ``an interest 
relating to the property or transaction which is the subject of the 
action and [that it] is so situated that the disposition of the action 
may as a practical matter impair

[[Page 67925]]

or impede [its] ability to [protect that interest. Unless [it is] 
adequately represented by existing parties.'' Fed. R. Civ. P. 
24(a)(2).\10\ ISNI's primary ``interest'' in this proceeding seems to 
be in using a broad public interest inquiry to obtain for its members 
access to GE's advanced diagnostic software. (Appendix 1, ISNI Comment 
at 7, 16, 19). But the entry of the proposed Final Judgment will not 
impair or impede any interest ISNI or its members may have in obtaining 
a license to GE's software both because this case related solely to 
GE's acquisition of InnoServ, not its software licensing policies, see 
Sections II(A)(1), (4), and because even it this case did deal with 
GE's licensing policies, entry of the proposed Final Judgment would not 
affirmatively set back ISNI's pursuit of that interest. See MSL, 118 
F.3d at 780 (movant ``points to no case equating failure to promote an 
interest with its impairment''). Nor can ISNI use an appeal to 
protecting the ``public interest'' to support its request for 
intervention. Private parties ``are not entitled to intervene simply to 
advance their own ideas of what the public interest requires. In 
federal antitrust litigation, it is the United States, not private 
parties, which `must alone speak for the public interest.' '' United 
States versus G. Heileman Brewing Co., 563F. Supp. 642, 648 (D. Del. 
1983) (quoting Buckeye Coal & Ry. Co. versus Hocking Valley Ry. Co., 
269 U.S. 42, 49 (1925)). Therefore, ``[a] private party generally will 
not be permitted to intervene in government antitrust litigation absent 
some strong showing that the Government is not vigorously and 
faithfully representing the public interest.'' United States versus 
Haftford-Empire Co., 573 F.2d 1, 2 (6th Cir. 1973), quoted with 
approval in United States versus LTV Corp., 746 F.2d 51, 54 n.7 (D.C. 
Cir. 1984). thus, intervention of right in support of the public 
interest is allowed, if at all, only after a showing of bad faith or 
malfeasance on the part of the government. United States versus 
Associated Milk Producers, Inc., 534 F.2d 113, 117 (8th Cir. 1976); G. 
Heileman Brewing, 563 F. Supp. at 649. While it is not evident that 
ISNI has even alleged bad faith or malfeasance, it is clear that it 
neither has made nor can make this necessary showing because the United 
States has acted properly and in good faith.
---------------------------------------------------------------------------

    \10\ Rule 24(a)(1) provides for intervention as of right when a 
statute confers an unconditional right to intervene, but the Tunney 
Act does not do so. See 15 U.S.C. Sec. 16(f).
---------------------------------------------------------------------------

    ISNI also fails to meet the requirements for permissive 
intervention. Under Rule 24(b)(2), an applicant may intervene when its 
``claim or defense and the main action have a question of law or fact 
in common.'' \11\ The words ``claim or defense'' refer to ``the kinds 
of claims or defenses that can be raised in courts of law as part of an 
actual or impending law suit.'' Diamond v. Charles, 476 U.S. 54, 76 
(1986). ISNI has made no showing that it has such a ``claim or 
defense'' here. In addition, a court ``must consider whether the 
intervention will unduly delay or prejudice the adjudication of the 
rights of the original parties.'' Fed R. Civ. P 24(b). As Judge Greene 
noted in the AT&T case, any rights granted to an intervenor in a Tunney 
Act proceeding are likely to impose burdens on the judicial process:

    \11\ Rule 24(b)(1) provides for intervention when a statute 
confers a conditional right to intervene. The Tunney Act provides 
for intervention, but expressly refers back to the Federal Rules of 
Civil Procedure. 15 U.S.C. Sec. 16(f)(3); see MSL, 118 F.3d at 780 
n.2.
---------------------------------------------------------------------------

    It could be argued that these include the right to file 
counterclaims and cross-claims, to adduce witness testimony and 
other evidence, and to appeal from orders of the Court. Such parties 
might also be contended to have the implicit right to veto any 
settlement simply by withholding their consent--a result that would 
in practice void the instant settlement proposal (whatever its 
substantive merit) and that would eliminate consent decrees as an 
option in antitrust cases generally (since someone would always or 
almost always be dissatisfied).

AT&T, 1982-2 Trade Cas. (CCH para. 64,726 at 71,525 n.7. ISNI has 
already attempted to expand this Tunney Act proceeding far beyond its 
proper scope by suggesting that the United States should have 
challenged previous transactions by GE, by arguing that GE should be 
required to license its own diagnostic software to ISNI's members, and 
by requesting a wide-ranging public interest inquiry in which ``fact 
gathering akin to discovery'' will take place. (Appendix 1, ISNI 
Comment at 7-8, 16, 19). Therefore, there is a particularly high risk 
that its intervention as a party would unnecessarily delay and 
complicate this Court's public interest determination. See Thomson 
Corp. 1996-2 Trade Cas. (CCH) para. 71,620, at 78,386 (D.D.C. 1996) 
(court denies motion to intervene by Lexis-Nexis, which suggested 
possibility of taking third-party depositions).
    ISNI has also not shown why its intervention is necessary given 
that it has already submitted its extensive Comments. Congress provided 
the 60-day notice and comment period as a means by which interested 
parties such as ISNI could express concerns about proposed antitrust 
settlements in cases brought by the United States. ISNI has done so, 
and its intervention will constitute an unnecessary delay. See Airline 
Tariff Publ'g Co., 1993-1 Trade Cas. (CCH) para. 70,191, at 69,894 
(D.D.C. 1993) (motion to intervene denied when movant's comments ``will 
enable [movant] to inform the Court and all parties of the effects of 
the proposed decree on its members''); Stroh Brewery Co., 1982-2 Trade 
Cas. (CCH para. 64,804, at 71,960 (D.D.C. 1982) (motion to intervene 
denied, in part, because movant ``fully able to express its concerns 
utilizing the comment procedures of the Tunney Act'').
    In a few cases, courts have permitted third parties with greater 
interests than ISNI's to intervene on a very limited basis. For 
example, in the case challenging the merger of The Thomson Corporation 
and West Publishing Company, Hyper Law, Inc. (a small publisher) was 
permitted to intervene solely for the purpose of appealing entry of the 
final judgment after Judge Freidman concluded that it had 
``sufficiently demonstrated that it will suffer actual, concrete, 
particularized injury traceable to the entry of the Final Judgment * * 
*.'' Thompson Corp., 1997-1 Trade Cas. (CCH) para. 71,735, at 79,182 
(D.D.C. 1997). Similarly, the D.C. Circuit in the MSL case permitted 
the Massachusetts School of Law, the plaintiff in a parallel treble-
damage action against the American Bar Association, to intervene in the 
government's case solely for the purpose of appealing its claim of 
entitlement in a Tunney Act proceeding to certain documents that it 
might not be able to obtain through discovery in its own case, a claim 
which entry of the final judgment would decisively impair. MSL, 118 
F.3d at 781-82. In the Antitrust Division's case against market-makers 
in NASDAQ securities, the district court permitted private plaintiffs 
in parallel actions to intervene in the Tunney Act proceeding for what 
the court described as ``two very limited purposes'': filing a motion 
for disclosure of a single document and the underlying evidence cited 
therein for use in the private litigation; and raising an objection to 
a single provision of the proposed consent judgment that could have 
restricted use of potential evidence. United States v. Alex. Brown & 
Sons, Inc., et al., 169 F.R.D. 532, 539 (S.D.N.Y. 1996). The court 
limited the role of the intervenors to ``submitting comments on the 
decree, engaging in oral argument, and filing appeals.'' Id. And, 
although ISNI itself was allowed to intervene in the case involving the 
modification of the 1956 consent

[[Page 67926]]

judgment against IBM, its rights were limited to appealing the court's 
entry of the modified order (Appendix 1, ISNI Comment at 4; Appendix 2, 
Betzner Decl., Exh. C). In an earlier opinion, ISNI's attempt to 
intervene in the district court proceedings ``to conduct discovery, 
present evidence, introduce new issues, and otherwise influence the 
pace and direction of the proceedings'' was denied. United States v. 
International Business Machines Corp., 1995-2 Trade Cas. (CCH) para. 
71,135, at 75,459 (S.D.N.Y. 1995).\12\
---------------------------------------------------------------------------

    \12\ See also United States v. American Cyanamid Co., 556 F. 
Supp. 357, 359-61 (S.D.N.Y. 1982) (permissive intervention granted 
because ``time consuming and expensive discovery demands often 
asserted by intervening parties will not be endured here. Applicants 
seek only to preserve their right to appeal * * * and participate in 
such further proceedings as this Court may direct on its own 
motion''), aff'd. 719 F.2d 558 (2d Cir. 1983); United States v. 
American Tel. & Tel. Co., 552 F. Supp. at 219 (in case involving the 
dissolution of the world's largest corporation and the restructuring 
of the telecommunications industry, third parties allowed to 
intervene to appeal entry of the consent judgment, participate in 
post-judgment proceedings, and appeal from order approving AT&T's 
reorganization plan).
---------------------------------------------------------------------------

    These cases offer no support of ISNI's broad request to intervene 
in this case. ISNI has not made a showing that it will suffer injury 
from the entry of the proposed Final Judgment. It is not, as far as the 
United States is aware, involved in litigation against GE relating to 
the issues in this case. And, in contrast to the very limited rights 
afforded intervenors in the cases discussed above, ISNI apparently 
foresees a virtually unlimited role for itself, which will include 
engaging in ``fact gathering akin to discovery'' (Appendix 1, ISNI 
Comment at 19). ISNI intervention request falls far short of the 
requirements set forth in Rule 24 and should be denied.)
    Finally, ISNI notes that the APPA permits a Court to appoint a 
special master to aid in its public interest determination (Appendix 1, 
ISNI Commend at 18-19). Under 15 U.S.C. Sec. 16(f), the Court may, 
among other things, take testimony of Government officials and experts 
or appoint a special master to assist it in making its public interest 
determination. These procedures are discretionary, however, and the 
Court need not invoke any of them unless it believes that significant 
issues have been raised and that further proceedings would aid the 
court in resolving those issues. See S. Rep. No. 298, 93d Cong., 1st 
Sess. 6-7 (1973); H.R. Rep. No. 1463, 93d Cong., 2d Sess. 8-9 (1974). 
The appointment of a special master in government antitrust cases is 
extremely rare. Indeed, the United States has been unable to locate any 
case in which a court has appointed a special master to assist it 
during a Tunney Act proceeding. ISNI's Comments do not raise any issues 
that would justify taking this extraordinary step.
7. The Court Need Not Hold a Hearing in Making Its Public Interest 
Determination
    In the event the Court denies ISNI's requests for intervention and 
the appointment of a special master, ISNI requests that a hearing be 
held in which it can reply to the United States' Response to its 
Comments. (Appendix 1, ISNI Comment at 19). The Tunney Act does not 
provide third parties with a right to reply, however, and Congress 
``anticipated that the trial judge will adduce the necessary 
information [for making a public interest determination] through the 
least complicated and least time-consuming means possible.'' S. Rep. 
No. 298, 93d Cong., 1st Sess. 4 (1973). The United States believes that 
a hearing is unnecessary because ISNI has already adequately expressed 
its views through the public comment procedure. See G. Heileman Brewing 
Co., 563 F. Supp. at 650 (court denies request for evidentiary hearing 
when ``those same issues have already been raised by movants through 
the APPA's third-party comment procedure); United States v. Carrols 
Development Corp., 454 F. Supp. 1215, 1221-22 (N.D.N.Y. 1978) (request 
for limited participation denied when ``the moving parties have set 
forth their views in considerable detail in briefs and affidavits filed 
with this Court as well as in written comments submitted to the 
Government under the APPA''). If, however, the Court determines that a 
hearing would be useful in making its public interest determination, 
the United States would not object to ISNI's appearance as an amicus 
curiae.

B. Supplemental Comment of ISNI

    ISNI submitted a Supplemental Comment on September 16, 1998, the 
day that GE issued a press release announcing that it had completed its 
acquisition of InnoServ. ISNI contents that the fact that GE acquired 
InnoServ before the end of the 60-day notice and comment period under 
the APPA, and before the Court's approval of the proposed Final 
Judgment, ``undermines and disrespects the processes of the APPA'' and 
makes it more difficult for the United States to withdraw its consent 
to the entry of the proposed Final Judgment. (Appendix 3, ISNI 
Supplemental Comment at 2).
    The vast majority of mergers challenged by the government are 
resolved by consent in the form of proposed final judgments that call 
for some form of divestiture. It is customary in such circumstances to 
permit the parties to merge at the time that the complaint and proposed 
final judgment are filed, subject to the parties' obligations under the 
proposed final judgment. For example, since October 1996 in this 
District alone, the United states has filed 13 cases challenging 
mergers that were settled on terms requiring a divestiture or some 
other relief. In each of these cases, the parties were allowed to merge 
prior to the close of the comment period and entry of the final 
judgment by the court. The parties in such cases understand that the 
proposed final judgment is subject to public comment, that the United 
States may revoke its consent at any time before the final judgment is 
entered, and that the final judgment will not be entered unless a court 
finds that it is in the public interest.
    Parties are willing to assume this risk for legitimate business 
reasons. With many mergers, time is of the essence. Parties to mergers 
often designate a date certain on which either party may terminate the 
agreement if the merger has not been effected. The United States 
challenges numerous mergers because of competitive problems that can be 
fixed through a divestiture of assets rather than an injunction against 
the transaction as a whole. Often the parties to such mergers are 
willing to agree to such divestitures in exchange for the right to 
consummate their transaction in a timely manner. If the United States 
refuse to allow such mergers to proceed until after the 60-day notice 
and comment period plus any additional time the court required to make 
its public interest determination, many defendants might refuse to 
settle and force the government seek emergency injunctive relief from a 
court.\13\
---------------------------------------------------------------------------

    \13\ In addition, permitting parties to merge quickly is 
precompetitive because it hastens the divestiture of the 
competitively important assets to a third party with the incentive 
and capability of competing vigorously against the acquiring party 
to the merger.
---------------------------------------------------------------------------

    The fact that GE might complete its acquisition of InnoServe before 
the entry of the proposed Final Judgment was disclosed in the 
Stipulation and Order, which was filed on the same day as the Complaint 
and other court papers. The Stipulation included a paragraph requiring 
the defendants to comply with the proposed Final Judgment once GE 
acquired InnoServ, even if that occurred prior to the Court's approval 
and entry of the judgment.\14\

[[Page 67927]]

Likewise, the proposed Final Judgment itself gives GE ``180 calendar 
days from the filing of the Complaint in this action or five days after 
notice of entry of this Final Judgment by the Court, whichever is 
later, to sell InnoServ's PREVU diagnostic package * * *.'' (Proposed 
Final Judgment para.IV(A)). Both of these provisions clearly envision 
that GE might acquire InnoServ, and thus begin its efforts to sell 
PREVU, before the Court's entry of the proposed Final Judgment.
---------------------------------------------------------------------------

    \14\ ``The defendants agree to comply with the proposed Final 
Judgment pending its approval by the Court, and shall, from the date 
of signing this Stipulation, comply with all the terms and 
provisions of the proposed Final Judgment as though it were in full 
force and effect as an order of the Court, provided, however, that 
defendants shall not be bound by the terms and provisions of the 
proposed Final Judgment unless and until the closing of any 
transaction in which General Electric Company directly or indirectly 
acquires all or any part of the assets or stock of InnoServ 
Technologies, Inc.'' (Stipulation and Order para.3).
---------------------------------------------------------------------------

    Moreover, contrary to ISNI's assertion, GE's acquisition of 
InnoServ on September 16 does not make it more difficult for the United 
States to withdraw its consent to the proposed Final Judgment. Nor does 
it preclude this Court from evaluating whether entry of the proposed 
Final Judgment is in the public interest or declining to enter the 
order if it believes the settlement is unacceptable. By consummating 
its acquisition of InnoServ, GE has assumed the risk that the United 
States might withdraw its consent and proceed to trial or that this 
Court may decline to enter the proposed Final Judgment.\15\
---------------------------------------------------------------------------

    \15\ The relief ISNI apparently prefers--the mandatory licensing 
of GE's diagnostic software to ISOs--also has nothing to do with the 
fact that GE has already acquired InnoServ. For the reasons stated 
above, the United States does not believe that this is an 
appropriate remedy for this acquisition. But if GE ultimately agreed 
to license it owns software, or was ordered to do so by this Court 
after a trial in this case, the fact that it has already acquired 
InnoServ would not make that licensing any more difficult.
---------------------------------------------------------------------------

C. Comment of Star Technologies

    Star Technologies (``Star'') of Potomac, Maryland also submitted a 
Comment expressing concerns about the potential sale or license of 
InnoServ's PREVU software. Star manufacturers array processors used in 
conjunction with certain models of GE's CT scanners. Star has also 
developed diagnostic software, called Star Maintenance Software 
(``SMS''), for testing its array processors and has licensed SMS to 
numerous customers for their own internal use. Although InnoServ is a 
customer of Star for the repair of certain circuit boards, Star does 
not believe that InnoServ has licensed SMS in the past. Based on recent 
discussions with InnoServ, however, Star believes that PREVU 
incorporates, or in some way, uses SMS. Star is therefore interested in 
identifying any purchasers or licensees of PREVU so that it can seek to 
enforce its intellectual property rights by requiring any such buyer or 
licensee to sign a SMS license. (Appendix 4, Star Technologies Comment 
at 1-2).
    The United States has informed Star that GE, since its September 16 
acquisition of InnoServ, is the current owner of PREVU. It has also 
advised GE of Star's claim of potential infringement. This dispute 
properly is between Star and GE, and the proposed Final Judgment does 
not affect the rights of anyone involved in this dispute. In any sale 
of assets, the seller discloses all such liens and claims against the 
assets being sold, and GE will presumably do so when selling PREVU. So, 
too, will the trustee, in selling or licensing PREVU, if GE fails to 
sell PREVU within the time prescribed by the proposed Final Judgment. 
The proposed Final Judgment does not affect Star's intellectual 
property rights in any way, and does not affect Star's ability to 
locate the owner or licensees of PREVU any more than if InnoServ has 
decided to sell PREVU on its own.

III. Legal Standard Governing the Court's Public Interest 
Determination

    Pursuant to the APPA, the United States is submitting these public 
comments and this Response to the Federal Register for publication. 15 
U.S.C. Sec. 16(d). Upon their publication, the United States will have 
fully complied with the APPA and will file a motion requesting that 
this Court enter the proposed Final Judgment. After receiving that 
motion, the Court must determine whether entry of the proposed Final 
Judgment ``is in the public interest.'' 15 U.S.C. 16(e). In doing so, 
as our motion for entry of the proposed Final Judgment will explain, 
the Court must apply a deferential standard and should withhold its 
approval only under very limited conditions. In the MSL case, the D.C. 
Circuit stated that ``constitutional questions would be raised if 
courts were to subject the government's exercise of its prosecutorial 
discretion to non-deferential review,'' and stated that a court should 
withhold approval of a proposed final judgment ``only if any of the 
terms appear ambiguous, if the enforcement mechanism is inadequate, if 
third parties will be positively injured, or if the decree otherwise 
makes `a mockery of judicial power.' '' MSL, 118 F.3d at 783, quoting 
Microsoft, 56 F.3d at 1462. As Judge Greene observed in the AT&T case:

    If courts acting under the Tunney Act disapproved proposed 
consent decrees merely because they did not contain the exact relief 
which the court would have imposed after a finding of liability, 
defendants would have no incentive to consent to judgment and this 
element of compromise would be destroyed. The consent decree would 
thus as a practical matter be eliminated as an antitrust enforcement 
tool, despite Congress' directive that it be preserved.

AT&T, 552 F. Supp. at 151. As this Response makes clear, the relief 
mandated by the proposed Final Judgment is well within the reaches of 
this public interest standard.

IV. Conclusion

    After careful consideration of these public comments, the United 
States has concluded that entry of the proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust violation 
alleged in the Complaint, and is therefore in the public interest. Once 
these comments and this Response are published in the Federal Register, 
the United States will move the Court to enter the proposed Final 
Judgment.

    Dated: November 17, 1998.

      Respectfully submitted,
Jon B. Jacobs (D.C. Bar #412249)
Fred E. Haynes (D.C. Bar #165654)
Joan H. Hogan (D.C. Bar #451240)
Peter J. Mucchetti
Attorneys for the United States.

Bernard M. Hollander,
Senior Trial Attorney.

Antitrust Division, U.S. Department of justice, 325 Seventh Street, 
N.W., Suite 300, Washington DC 20530, (202) 514)-5012.

Appendix 1

    United States of America, Department of Justice, Antitrust 
Division, 325 7th Street, NW, Suite 300, Washington, DC. 20530, 
Plaintiff, v. General Electric Company, 3135 Easton Turnpike, 
Fairfield, Connecticut 06431, and InnoServ Technologies, Inc., 320 
Westway, Suite 530, Arlington, Texas 76018, Defendants. Case Number 
1:98CV01744. Judge: Royce C. Lamberth.

Public Comment of Independent Service Network International 
Pursuant to 15 U.S.C. Sec. 16(b),(d)

    Pursuant to 15 U.S.C. Sec. 16(b),(d), of the Antitrust Procedures 
and Penalty Acts (``APPA'') Independent Service Network International 
(``ISNI''), a trade association of 157 maintainers of high technology 
equipment, including medical equipment of the type at issue in this 
matter,\1\ submits this public

[[Page 67928]]

comment to the Competitive Impact Statement (``CIS'') published in the 
Federal Register at 63 FR 39894.
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    \1\ InnoServ Technologies, Inc., one of the defendants in the 
above-captioned case, is a member of ISNI, but, because of conflict 
of interest considerations, has not been informed of or consulted 
about this public comment. Similarly, this comment is not intended 
to express any views of Serviscope, an ISNI member acquired by GEMS 
in August, 1998. See attached Declaration of Claudia Betzner, para 
6.
---------------------------------------------------------------------------

I. Introduction

    The CIS does not comply with the APPA because it does not provide 
the Court or the public with sufficient information to evaluate this 
consent decree. Information necessary for that evaluation includes the 
following:
    1. A technical and economic evaluation of the key component of this 
settlement--InnoServ's PREVU advanced diagnostic package (``PREVU'')--
to demonstrate that it can accomplish what the parties call ``the 
essence'' of this final judgment, i.e., ``* * * to establish a viable 
competitor in the sale of service for certain models of G.E. diagnostic 
imaging equipment * * *'' 63 FR at 39894.
    2. To define and describe the markets in which this ``essence'' of 
the consent decree is to be accomplished.
    3. To provide information on other companies, if any, that 
expressed an interest in purchasing InnoServ and that would present 
less competitive problems than General Electric Medical Systems 
(``GEMS'') as an acquirer.
    4. To describe and provide, pursuant to APPA Secs. (b) and (c), 
materials and documents which the United States considered 
determinative in formulating the consent decree so that there can be 
meaningful public comment (the assertion in the CIS that there are no 
such materials or documents is, as a District Court stated in a similar 
case, ``incredible,'' U.S. v. Central Contracting Co., Inc., 537 F. 
Supp. 571, 576 (1982)).
    5. The relationship, if any, between this settlement and United 
States v. General Electric Co., No. CV-96-121-M-CCL (D. Mont. filed 
August 1, 1996) (``Montana Case''), which GEMS stated it settled in 
order ``to obtain clearance to complete the InnoServ acquisition * * 
*'' See, Betzner Decl., Exhibit A.
    Without the above information, it is not possible for the Court to 
make its public interest determination pursuant to Sec. (e) of the APPA 
nor is it possible for the public to make meaningful comments on the 
CIS.
    A public interest determination is particularly important in this 
case because it involves the cost of healthcare, a subject important to 
all Americans, because GEMS has a high market share in the relevant 
markets, which it has extended through recent aggressive transactions 
unopposed by the Government; and because there is no evidence that 
there is any legitimate reason for GEMS to acquire one of its few 
competitors, a company less than 1% its size. Therefore, pursuant to 
APPA Sec. (f) and based on the showing detailed below, ISNI 
respectfully requests that the Court authorize ISNI to intervene as a 
party pursuant to the Federal Rules of Civil Procedure and that the 
Court appoint a special master to preside over the gathering of the 
information necessary to evaluate this CIS.

II. ISNI and Its Interest in This Proceeding

    ISNI, an association of 157 independent service organizations, 
i.e., organizations servicing equipment manufactured by others (see 
Betzner Decl., Exhibit B for a list of members), is a nonprofit 
corporation incorporated in the District of Columbia. In competition 
with the service organizations of manufacturers, the members of ISNI 
service various types of high-technology equipment, including medical 
equipment of the type that is the subject of the CIS. ISNI's members 
account for over $1.5 billion in commerce.
    The purpose of ISNI for the past fourteen years has been to promote 
and maintain a closer union and organization of independent service 
organizations. Specifically, ISNI develops educational methods to 
increase awareness about independent service organizations and studies 
economic and legal problems confronting them. ISNI also serves as a 
clearing house for information and data relating to its members' 
businesses and ISNI promotes better relations among providers, 
distributors and manufacturers of supplies and services.
    ISNI has participated in various legal proceedings on behalf of its 
members. For example, ISNI, then known as Computer Service Network 
International, filed a friend-of-the-court brief which was cited by the 
United States Supreme Court in its landmark antitrust decision 
concerning service aftermarkets, Eastman Kodak Co. v. Image Technical 
Services, Inc., et al., 504 U.S. 451, 462 n.6 (1992). Also, pursuant to 
the order of Chief Judge Thomas P. Griesa of the Southern District of 
New York (Betzner Decl., Exhibit C), ISNI has been granted the right to 
intervene for purposes of appeal in the proceeding concerning the 
termination of the IBM consent decree, United States of America v. 
International Business Machines Corporation, 52 CIV. 72-344 (TPG), 
currently pending the U.S. Court of Appeals for the Second Circuit. 
ISNI has filed a brief in that proceeding.
    In his order, Judge Griesa found that ``ISNI has a legitimate 
interest in appealing from the May ruling, and it is in the public 
interest to allow ISNI to appeal'' (Id. at 2). Similarly, it is in the 
public interest for ISNI to intervene in this proceeding because a 
dwindling number of its members compete with GEMS in the markets 
alleged by the Justice Department in the complaint in this matter. The 
reasons that the number is dwindling are that GEMS has a large market 
share; it has aggressively extended that market share through the 
transactions described below, unopposed by the U.S. government; and its 
advanced diagnostics are an essential facility necessary to compete in 
the relevant markets.
    The reasons that it is in the public interest for ISNI to intervene 
in this matter are cogently set forth in the Government's complaint in 
this matter (Betzner Decl., Exhibit J):

    Paragraph 3: ``If G.E. acquires InnoServ, G.E. will increase its 
already high share in the markets for servicing certain models of 
G.E. imaging equipment on a discrete basis, particularly several 
models of CT scanners and MRI's, and it will eliminate an effective 
competitor in these markets. It will also substantially reduce 
competition in multi-vendor service markets. Unless blocked, this 
acquisition likely will result in higher prices for imaging 
equipment, maintenance and service.''
    Paragraph 20: ``In many of these markets, InnoServ is one of the 
few ISOs that has specialized in servicing G.E. imaging equipment * 
* * the competition between G.E. and InnoServ in these markets has 
resulted in significant price reductions for consumers. G.E.'s 
acquisition of the InnoServ would eliminate this competition and 
increase G.E.'s already high share in the markets for servicing 
certain models of G.E. imaging equipment, particularly several 
models of CT scanners and MRIs. It would also substantially reduce 
competition in multi-vendor service markets.''
    Paragraph 21: ``Successfully entry into the relative markets is 
difficult, time-consuming and costly. In general, customers prefer 
to purchase service from existing, reputable firms in the industry. 
Therefore, new entrants often find it difficult to enter on a scale 
necessary to succeed financially.''
    Paragraph 23: ``G.E.'s proposed acquisition of InnoServ is 
likely to lessen competition substantially and tend to create a 
monopoly in interstate trading commerce in violation of Section 7 of 
the Clayton Act, 15 U.S.C. Sec. 18.''
    Paragraph 24: ``The transaction likely will have the following 
effects among others:
    a. Actual and future competition between G.E. and InnoServ will 
be eliminated in the markets for servicing certain models of G.E. 
imaging equipment under discrete, machine-by-machine basis in 
numerous local markets throughout the United States;

[[Page 67929]]

    b. Competition generally in the markets for servicing certain 
models of G.E. imaging equipment on a discrete, machine-by-machine 
basis in numerous local markets throughout the United States will be 
lessened substantially;
    c. Actual and future competition between G.E. and InnoServ will 
be eliminated in the markets for multi-vendor service in numerous 
local markets throughout the United States; and
    d. Competition generally in the markets for multi-vendor service 
in numerous local markets throughout the United States will be 
lessened substantially.''

    Despite these pernicious effects, the government has consented to 
this acquisition based essentially on the divestiture of PREVU. 
However, the parties have not provided this Court or the public with 
the fundamental information necessary to evaluate this settlement. 
ISNI, because of the expertise of its members and counsel, can aid the 
Court in obtaining and evaluating this information; ISNI respectfully 
requests that the Court grant ISNI the opportunity to do so pursuant to 
APPA Sec. (f).

III. GEMS' Monopoly and Its Successful Efforts To Maintain and 
Extent It

    According to its own press release, ``G.E. Medical Systems, based 
in Milwaukee, WIS., is a $4.5 billion global provider of medical 
diagnostic imaging systems, services and solutions with 16,000 
employees worldwide.'' (Betzner Decl., Exhibit A.) As indicated by the 
quotations from the Government's complaint in Section II above, GEMS 
has a monopoly market share in the markets alleged by the government in 
its complaint: (1) servicing certain models of G.E. imaging equipment 
on a discrete machine-by-machine basis in numerous local markets 
throughout the United States, and (2) multi-vendor service in numerous 
local markets throughout the United States.
    What is more alarming is that G.E. has extended and maintained this 
monopolistic market share by a number of aggressive transactions in 
recent years unopposed by the U.S. government:
     August, 1994: strategic alliance with Advanced NMR 
Systems, Inc., regarding very high field magnetic resonance systems. 
(Betzner Decl., Exhibit D.)
     June, 1995: five-year agreement with Columbia/HCA 
Healthcare Corp. covering the service of all diagnostic imaging 
equipment in the hospital chain, which at that time consisted of 320 
hospitals. (Id., Exhibit E.)
     February, 1996; acquisition of National Medical 
Diagnostics, Inc., which at the time of acquisition provided medical 
equipment maintenance services to 220 hospitals in 23 states. (Id., 
Exhibit F.)
     August, 1996: acquisition of Specialty Underwriters, a 
seller of maintenance insurance to the healthcare industry, and 
Maintenance Management, which provides service for medical equipment. 
(Id., Exhibit G.)
     August, 1997: investment of $5.1 million in Advanced NMR 
Systems, Inc., an extension of the August 1994 alliance described 
above. (Id., Exhibit H.)
     December, 1997: five-year marketing pact with INPHACT, a 
provider of on-line radiology services for radiologists (Id., Exhibit 
I.)
     August, 1998: acquired Serviscope, a medical equipment 
maintenance and asset management company that was one of the few 
potential candidates to compete with GEMS to acquire Innoserv. (Id., at 
para 6.)
    With each of these transactions, GEMS got stronger both absolutely 
and also relative to its much smaller ISO competitors. Innoserv, with 
revenues of $37 million a year, is described in the CIS as ``* * * one 
of the nation's largest independent service organizations (`ISOs'),'' 
63 FR at 39898. That a $37 million a year company was considered of the 
largest competitors of a company 120 times its size in itself 
illustrates the weakness of GEMS' competitors.
    Nonetheless, an ISO like Innoserv does provide customers with an 
alternative. This alternative keeps GEMS from having a 100% monopoly 
and also helps to keep prices down to a certain extent.
    Eliminating that little spark of competition was the only logical 
motivation for GEMS to acquire InnoServ. This acquisition makes no 
sense except to eliminate one of the last vestiges of national 
competition for the service of GEMS imaging equipment. The fact that 
GEMS has since acquired one of the other remaining competitors--
Serviscope--demonstrates that GEMS' goal is the lack of any meaningful 
service competition.

IV. Non-compliance With the APPA

    Section (b)(3) of the APPA requires the CIS to recite ``an 
explanation of the proposal for a consent judgment, including an 
explanation of * * * relief to be obtained thereby, and the anticipated 
effects on competition of such relief,'' and Sec. (e) requires this 
Court to determine that the entry of such judgment is in the public 
interest by considering ``the competitive impact of such judgment, 
including termination of alleged violations, provisions for enforcement 
and modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other considerations 
bearing upon the adequacy of such judgment.'' As demonstrated below, 
the information required by Sec. (b) has not been provided in the 
Competitive Impact Statement, and that fact disables the ISNI and other 
members of the public from making a ``meaningful public comment'' on 
its (APPA Sec. (c)) and disables this Court from making its public 
interest determination pursuant to APPA Sec. (e).
    The following fundamental information is missing from the CIS: a 
technical and economic assessment of PREVU; a description of the 
markets involved in the settlement and the effect of the settlement on 
those markets; information about other firms, if any, that expressed 
interest in purchasing InnoServ; and information about the relationship 
of the simultaneous consent decree between the same two parties 
concerning a litigation in Montana that also involves GEMS' advanced 
diagnostics. The significance of the non-provision of these items of 
information will be discussed below.

A. The CIS Provides Nothing but Speculation About the Acknowledged 
Keystone of This Consent Decree, PREVU

    The proposed stipulated final judgment of this litigation states 
that ``The essence of this Final Judgment is the prompt and certain 
divestiture through sale or licensing of certain rights or assets by 
the defendants to establish a viable competitor in the sale of service 
for certain models of G.E. diagnostic imaging equipment, and the sale 
of comprehensive asset-management or multi-vendor services, or in the 
licensing of advanced diagnostic software for use in any such 
service.'' 63 FR at 39894 (emphasis added). These ``rights or assets'' 
are PREVU, which is defined at 63 FR 39895.
    But the CIS does not make a showing--or even try to make a 
showing--that PREVU can establish a viable competitor. One of the few 
things that the CIS says about PREVU is the conclusory statement that 
PREVU gives ``* * * InnoServ a competitive advantage in servicing 
certain models of imaging equipment and in multi-vendor service.'' Id. 
at 39898, and that ``InnoServ is an effective competitor of G.E. in 
part because InnoServ is one of the very few companies that has 
developed proprietary diagnostic software for servicing certain models 
of G.E. imaging equipment.'' (Id. at 39898). But this information about 
so-called

[[Page 67930]]

effective competition is contradicted by other information in the CIS:

[InnoServ] has struggled financially for the past two years * * * 
losing over $1.5 million for the nine months ending January 31, 
1998. In March 1998, InnoServ publicly expressed concern about its 
ability to continue to meet its working capital requirements.

This fact alone indicates that InnoServ is not providing effective 
competition to GEMS and that PREVU is not helping it to do so. It makes 
a significant difference in the antitrust analysis whether InnoServ is 
an effective or a struggling competitor. if it is effective, why is it 
losing money? If it is struggling, how will the divestiture of PREVU 
create an effective competitor when it was not able to make InnoServ an 
effective competitor? The contradictory statements on this subject in 
the CIS disable public commentators and the court from making this 
critical analysis.
    The only other information about PREVU in the Competitive Impact 
Statement is as conclusory as that presented above. ``The divestiture 
of the PREVU diagnostic package will allow one or more third parties to 
use the software, which in turn will enable them to service more 
efficiently certain models of imaging equipment and better compete in 
the markets for servicing individual pieces of imaging equipment and 
providing multi-vendor service.'' Id. at 39899. There is absolutely no 
evidence supporting these conclusions. The reader of the CIS does not 
know whether any entity has ever asked to license or purchase PREVU. 
Similarly, the reader of the CIS cannot know if or, if so, why, use of 
PREVU will enable these unnamed ``third parties'' ``* * * to service 
more efficiently certain models of imaging equipment * * *.'' Id.
    The CIS goes on to say, in a completely speculative manner, that 
``in addition to using the package in its service business, a buyer of 
PREVU could resell or license PREVU to other parties.'' Id. Again, the 
reader of the CIS does not know the names of any potential ``other 
parties'' to whom the unnamed ``third parties'' buying PREVU could 
resell or license PREVU.
    The CIS adds. ``The ability to improve upon PREVU * * * would 
further improve an entity's ability to compete with G.E.'' Id. Without 
having told the reader of the CIS in any detail what PREVU is, it is 
impossible to know whether it will improve anyone's ability to compete 
with GEMS or, a fortiori, ``further improve'' such ability.
    At a minimum, the following information is needed for the public 
and the Court to evaluate this consent decree:
    1. A detailed description of PREVU.
    2. Whether anyone has licensed or purchased PREVU from InnoServ;
    3. Whether anyone has expressed an interest to license or purchase 
PREVU from InnoServ;
    4. Whether PREVU helps InnoServ and potentially others to compete 
with GEMS and, if so, how;
    5. A comparison between the effectiveness of PREVU and the 
effectiveness of GEMS' advanced diagnostics;
    6. Why it is not anticompetitive for GEMS to retain a non-exlusive 
non-assignable license to use PREVU (Id. at 39895) even though GEMS 
does not, and is not being required to, license its own advanced 
diagnostic software to competing service providers.
    The CIS itself indicates doubt as to the value of PREVU by 
providing for the appointment of a trustee to sell PREVU if it is not 
sold within approximately 180 days. Advanced diagnostics allegedly 
capable of creating a viable competitor would not be on the market that 
long.

B. The CIS Does Not Provide Adequate Information About the Markets 
Involved and the Effect of the Consent Decree on Those Markets

    The U.S. Supreme Court has held that anticompetitive restraints 
have to be considered ``in light of the competitive situation in `the 
product market as a whole' '', Continental T.V., Inc. v.  GTE Sylvania, 
Inc., 433 U.S. 36, 45 (1977), and that ``an antitrust policy divorced 
from market considerations would lack any objective benchmarks.'' Id. 
at 53, n. 21. At a minimum, such an analysis requires a definition of 
the relevant markets; the structure of such markets, including such 
factors as the number of firms and their respective market shares; and 
an analysis of the effect of the restraint and of the consent decree on 
price, output, consumer choice, and product quality.
    As detailed below, none of this information appears in any useful 
way in the CIS.
    The Government alleges the following markets in its Complaint 
(Betzner Decl., Exhibit J):
    1. The markets for servicing certain models of G.E. imaging 
equipment on a discrete machine-by-machine basis in numerous local 
markets throughout the United States; and
    2. the markets for multi-vendor service in numerous local markets 
throughout the United States.
    See Complaint at paragraphs 2, 3, 12, 14, 16, 17, 19, and 24. 
However, nowhere have these markets been defined in the CIS.
    Similarly, the complaint is bereft of information about market 
structure, in particular the number of firms in the alleged markets 
with their respective market shares. Indeed, no competitors in these 
markets are named except InnoServ and GEMS, and no markets shares are 
given.
    Without market definitions and without a description of the 
structure of the market, it is impossible to describe the anticipated 
effects on competition of the consent decree as required by APPA 
Sec. (b)(3). Without such information, the following assertion in the 
CIS is purely conclusory with no evidence at all backing it up: ``The 
proposed Final Judgment would promote additional competition in 
servicing certain models of G.E. imaging equipment and in multi-vendor 
service by requiring G.E. to divest InnoServ's proprietary diagnostic 
service software and related materials to an acquirer acceptable to the 
United States.'' 63 FR at 39898. The combination of the total lack of 
market information with the total lack of substantive information about 
PREVU stymies public commenters like ISNI from providing meaningful 
comment and disables this Court completely from making the public 
interest determination required by APPA Sec. e.

C. The CIS Does Not Provide Information About Other Companies 
Interested in Purchasing Innoserv

    Given (1) the power, alleged in the Complaint, of GEMS to affect 
the market, (2) GEMS' size, (3) GEMS' recent transactions increasing 
that size and power (see Section II above), and (4) the low price of 
InnoServ ($16 million--see 63 FR at 39898) relative to GEMS' size, it 
is not surprising that GEMS has made the first offer for InnoServ. What 
the CIS does not state, however, is (1) what other companies, if any, 
expressed interest in InnoServ; (2) whether there was, as is likely, 
some appraisal done by a third party like an investment bank of the 
worth of InnoServ and/or PREVU, or (3) how long InnoServ was on the 
market. This information is essential for the court to make its public 
interest determination because, given the facts listed at the beginning 
of this paragraph, there may have been a serious suitor of InnoServ 
that would have had a much less anticompetitive effect than GEMS but 
that would not complete in a bidding war with GEMS. Indeed, it is 
difficult to imagine an acquiring company with more of an anti-
competitive effect than GEMS.

[[Page 67931]]

D. The CIS Does Not Provide Adequate Information on the Related Montana 
Consent Decree

    According to the CIS, ``In conjunction with this settlement, GE has 
also agreed to consent to all of the relief that the government was 
seeking in another case, United States v. General Electric Company, No. 
CV-96-121-M-CCL (D.Mont. filed Aug. 1, 1996),'' 63 FR at 39899. GEMS 
states this fact more emphatically in its press release about the 
Innoserv consent decree:

    To obtain clearance to complete the Innoserv acquisition, G.E. 
Medical Systems agreed to settle a civil lawsuit filed in Montana by 
the Antitrust Division of the Department of Justice. That lawsuit 
was filed in 1996 and challenged a G.E. Medical Systems practice 
under which health-care providers who were also in the business of 
performing third-party medical equipment service were not eligible 
to license G.E.'s proprietary advanced service materials, Betzner 
Decl., Exhibit A, emphasis added.

    Even though the Montana consent decree involves GEMS' advanced 
diagnostics, the CIS gives no supporting evidence or explanation of the 
following assertions at CIS 39899: ``The United States evaluated the 
merits of the settlement proposals in each case independently, 
concluding that the proposed settlement of this case is in the public 
interest for the reasons stated herein, and that the proposed 
settlement of the Montana case is in the public interest for reasons 
stated in the Competitive Impact Statement filed in that case today.''
    This dearth of evidence or explanation is problematic for public 
commenters like ISNI and for the Court because of the following 
assertion in the Montana CIS, 63 FR 40737, 40738: ``GE has developed 
advanced service materials [diagnostics like PREVU] that enable service 
engineers to service certain GE imaging equipment much more quickly 
than otherwise possible.'' ``Otherwise possible,'' of course, includes 
servicing with PREVU. Because of that fact the ``essence'' of the 
Innoserv Final Judgment, i.e., ``to establish a viable competitor'' to 
GEMS service, 63 FR 39894, does not appear to be possible because, by 
the U.S. Government's own cryptic evaluation, PREVU is inferior to the 
advanced service materials of GEMS.
    The only way to accomplish this ``essence'' appears to be to 
require the licensing of GEMS' advanced diagnostics to competitors. 
Mandatory licensing of the intellectual property of a monopolist was 
used as a remedy in the Kodak case (Image Technical Services, Inc. v. 
Eastman Kodak Co., 125 F.3d 1195, 1226, 1227 (9th Cir. 1997)) after a 
jury verdict. Such a remedy is a fortiori, appropriate here where GEMS 
seeks to extend its monopoly by a Government-approved and Court-
approved acquisition.
    The Government appears to have the remedy backwards in this case: 
it appears that the divestiture of PREVU will accomplish nothing 
whereas the mandatory licensing of GEMS advanced diagnostics could 
establish a viable competitor, which is the alleged ``essence'' of this 
consent decree.

E. The CIS Asserts, Incredibly, That There Were NO Materials Which the 
United States Considered Determinative in Formulating the Consent 
Decree

    APPA Sec. (b) requires the United States to publish with the CIS 
``* * * any other materials and documents which the United States 
considered determinative in formulating such proposal * * *.'' The CIS 
at 39900 states, incredibly, that ``there are not determinative 
materials or documents within the meaning of the APPA that were 
considered by the plaintiff in formulating the proposed Final 
Judgment.''
    This Court can take judicial notice that antitrust cases are among 
the most complex, document-intensive cases in the Federal Courts. This 
Court should respond in the same way as another District Court Judge 
responded to the same incredible claim: with incredulity and with an 
order to produce documents required by law. U.S. v. Central Contracting 
Co., Inc., 537 F. Supp. 571, 575, 577 (E.D. Va. 1982):

    The Act [APPA] clearly does not require a full airing of Justice 
Department files, but the Court cannot countenance plaintiff's claim 
that though Congress enacted sunshine legislation the courts may 
blandly (and blindly) accept government certification in case after 
case that no documents or materials, by themselves or in the 
aggregate, led to a determination by the government that it should 
enter into a consent decree.
* * * * *
This does not require full disclosure of Justice Department files * 
* * or defendant's files, but it does require a good faith review of 
all pertinent documents and materials and a disclosure of those 
which meet the above [APPA] criterium.
    Although no entity but the Government can know what these documents 
are, they should include at least the following:

--those documents providing the good-faith basis for the Government to 
file its complaint;
--third-party analyses or evaluations of Innoserv and/or PREVU;
--documents relating to the efforts of others, if any, to acquire 
Innoserv;
--documents supporting the conclusory statements in the CIS about how 
the divestiture of PREVU will increase competition; and,
--documents comparing PREVU and the advanced service materials of GEMS 
litigated in the Montana case.

These documents or documents like them must exist or else there is no 
reasoned basis for the consent decree. If they do not exist, then the 
Antitrust Division is not acting in a professional, competent manner.

V. This Court Should Authorize ISNI To Intervene and Should Appoint 
a Special Master

    APPA Sec. (f) authorizes this Court to ``appoint a special master 
and such outside consultants or expert witnesses as the court may deem 
appropriate'' and to ``authorize full or limited participation in 
proceeding before the court by interested persons or agencies, 
including * * * intervention as a party pursuant to the Federal Rules 
of Civil Procedure. * * *'' The defects of the CIS described above 
amply justify such an appointment and such an authorization.
    If the Government had unfettered prosecutorial discretion to settle 
antitrust cases, the APPA would not exist. Yet the Government is 
endowing itself with such unfettered discretion by not providing in the 
CIS information necessary for this Court to make its required public 
interest determination and for the public to meaningfully comment on 
the CIS.
    Whatever the reason for this non-compliance with the APPA, the 
Court cannot permit it. Because the Government and GEMS have not 
complied with the law although they clearly had the knowledge and the 
resources to do so, it is appropriate for the Court to use the APPA 
provisions that permit compliance with the APPA to occur.
    As mentioned in Sec. II above, the ISNI has the interest, expertise 
and the experience to aid the Court and to aid a special master 
appointed by the Court. A special master would be an efficient use of 
the Court's resources because fact gathering akin to discovery will be 
involved. The gathering and marshalling of facts will place this matter 
in the position in which it should have been when the CIS was filed. At 
that point the Court should be in a position to make its public 
interest determination or to order further proceedings.
    At the very least, the Court should order a hearing before making 
its public interest determination and should permit the ISNI to 
participate in that hearing. Otherwise, the Government's

[[Page 67932]]

response to this comment will go unanswered, and there is no reason to 
believe that the quality of that response will be any better than the 
quality of the CIS.

 VI. Conclusion

    By keeping the public and the Court ignorant of information 
required by the APPA, the Government is endowing itself with the 
unfettered prosecutorial discretion contrary to the very purpose of the 
APPA. ISNI respectfully requests this Court to uphold both the letter 
and the spirit of that statute in this important sector of the economy 
affecting the healthcare costs of literally every American.

      Respectfully submitted,

    Dated: September 15, 1998.
Ronald S. Katz,
Esq. General Counsel, ISNI, Coudert Brothers, 4 Embarcadero Center. 
Ste. 3300, San Francisco CA 94111, Telephone 415-986-1300.

Appendix 2

    United States of America, Department of Justice, Antitrust 
Division, 325 7th Street N.W., Suite 300, Washington, D.C. 20530, 
Plaintiff, v. General Electric Company, 3135 Easton Turnpike, 
Fairfield, Connecticut 06431, and InnoServ Technologies, Inc., 320 
Westway, Suite 530, Arlington, Texas 76018, Defendants. Case Number 
1.98CV01744. Judge: Royce C. Lamberth.

Declaration of Claudia Betzner in Support of Public Comment of 
Independent Service Network International Pursuant to 15 U.S.C. 
Sec. 16(b), (d)

    1. I, Claudia Betzner, am the Executive Director of the Independent 
Service Network International (`ISNI''), a trade association of 157 
maintainers of high technology equipment, including medical equipment 
of the type at issue in this matter. Independent service organizations 
service equipment manufactured by others.
    2. ISNI is a nonprofit corporation incorporated in the District of 
Columbia. Its members compete with the service divisions of 
manufacturers like General Electric Medical Systems (``GEMS'').
    3. ISNI has participated in various legal proceedings on behalf of 
its members, including Eastman Kodak Co. versus Image Technical 
Services, Inc., et al., 504 U.S. 451, 462 and United States of America 
versus International Business Machines Corporation, 52 CIV. 72-344 
(TPG), Second Circuit, U.S. Court of Appeals (pending).
    4. InnoServ is a current member of ISNI but has not been consulted 
about or advised of this public comment.
    5. Serviscope is a member of ISNI but ISNI has been informed by 
Serviscope that it was acquired by GEMS in late August of 1998.
    6. Attached hereto as Exhibit A is a true and correct copy of a 
press release from GEMS generated by a computer search.
    7. Attached hereto as Exhibit B is a true and correct copy of a 
database listing of all current members of ISNI.
    8. Attached hereto as Exhibit C is a true and correct copy of an 
Order issued by Chief Judge Thomas P. Griesa, Southern District of New 
York, in the case United States of America versus International 
Business Machines Corporation, 52 CIV 72-344 (TPG).
    9. I have generated a computerized database search for articles on 
GEMS' acquisitions. That search has generated true and correct copies 
of the articles which appear as Exhibits D through I of this 
declaration.
    17. Attached hereto as Exihibit J is a true and correct copy of the 
Complaint in this matter.
    I declare under penalty of perjury that the foregoing is true and 
correct.

    Executed this 12th day of September, 1998, at Atlanta, Georgia.
Claudia Betzner,
Executive Director, ISN International.

Exhibit A

Level 1-1 of 28 Stories

Copyright 1998 PR Newswire Association, Inc., PR Newswire

July 14, 1998, Tuesday.
Section: Financial News
Distribution: To Business Editor
Length: 514 words
Headline: GE Medical System Receives Clearance to Acquire InnoServ 
Technologies
Dateline: Milwaukee, July 14

    Body: GE Medical System announced today that it has received 
Department of Justice clearance to complete its acquisition of 
InnoServ Technologies, Inc. (Nasdaq: ISER), a provider of asset 
management, repair and maintenance programs for imaging, biomedical 
and laboratory equipment to health-care providers.
    ``InnoServ is an important addition to GE Medical Systems that 
will enhance our capability to provide multi-vendor service 
solutions to help health-care providers become more productive,'' 
said Jeffery R. Immelt, GE Medical Systems' president and CEO.
    ``InnoServ brings dedicated and talented service personnel to 
our GE team as well as enhance GE's circuit board repair and X-Ray 
tube reloading capabilities--all of which will help us to be a 
better partner for our multi-vendor service customers,'' Mr. Immelt 
said.
    To obtain clearance to complete the InnoServ acquisition, GE 
Medical Systems agreed to settle a civil lawsuit filed in Montana by 
the Antitrust Division of the Department of Justice. That lawsuit 
was filed in 1996 and challenged a GE Medical Systems paractice 
under which health-care providers who were also in the business of 
performing third-party medical service were not eligible to license 
GE's proprietary advanced service materials.
    Under the revised policy announced today, health-care providers 
will be eligible to lincense GE Medical Systems' advanced service 
materials for use by their own employees to service their own GE 
medical imaging equipment, without regard to the scope of their 
third-party service activities.
    Under both the challenged eligibility standards and the revised 
policy, GE will require that its customers not use GE proprietary 
information when they provide service to third parties.
    The settlement strongly affirms GEMS' right to control key 
aspects of its intellectual property licensing: e.g., whether and 
what to license; which customers would receive licenses; what to 
charge for a license; and what restrictions to place on the use of 
licensed materials to protect against misues.
    Under the settlement, there are no findings on admissions of any 
miscoduct by GE and GE is not liable for any damages, financial 
penalities or other monetary payment.
    GE Medicare Systems also agreed to divest InnoServ' PREVU 
diaguostic service materals following completion of the InnoServ 
acquisition.
    ``The settlement agreement recognizes GE's fundamental right to 
protect its intellectual property from misues. The Department of 
Justice agree with that goal. GE's goal has always been the same: to 
allow customers to compete in the service field as they see fit but 
to ensure that they do not use GE's proprietary software to do so,'' 
Mr. Immelt said.
    The InnoServ operations acquired by GE currently employ about 
220 people, including more than 120 field engineers.
    GE Medical Systems, based in Milwaukee, Wis., is a $4.5 billion 
global provider of medical diagnostic imaging systems, services and 
solutions with 16,000 employees worldwide.

Source: GE Medical Systems
Contact: Charles Young, Manager of Global Public Relations of GE 
Medical Systems, 414-544-3530, pager 888-864-3332, 
charles.youngmed.ge.com
Language: English
Load-Date: July 15, 1998

Exhibit B

Contact Company

AAI Engineering Support, Inc. Hunt Valley, MD
Access Corporation, Cincinnati, OH
Accram, Inc., Phoenix, AZ
Advanced Vio-Med Electronics, Slidell, LA
Advanced Technology Lab., Bothell, WA
Allina Ces, Roseville, MN
AM Services Operation, Santa Ana, CA
AMCOR, Fairfield, NJ
American Teleprocessing Corp., Houston, TX
AMSCO International, Erie, PA
Arand Corporation, Spring City, PA

[[Page 67933]]

ASI Copier & Fax Solutions, Dallas, TX
Authorized Technical Services, Oakland, CA
B.C. Tel Sys Support, Burnaby, BC
Baldwin, Cleveland, OH
Bay State Anesthesia Service, North Andover, MA
Beckmen Coulter, Fulton, CA
Bio Medic Inc., Crestwood, IL
Bio-Medical Equipment Service, Lousville, KY
Biomedical Concepts, Inc., Mandeville, LA
Biomedical Eqpt Spec Inc., Sioux City, IA
BioTechnical Services, San Diego, CA
BMC Solutions, Inc., Kennesaw, GA
Brains II, Inc., Markham, ON
C. Hoelzle Associates, Irvine, CA
Centura, Inc., Cleveland, OH
CIC Warrentek, College Station, TX
COHR, Chatsworth, CA
Comdisco Healthcare Group, Inc., Rosemont, IL
Comdoc Inc., Uniontown, OH
Compuquip, Inc., Miami, FL
Computer Maintenance Interntl, Falls Church, VA
Computer Maintenance Corp., College Park, GA
Computer Mtnce of the Triad, Winston Salem, NC
Computer Products & Services, Boca Raton, FL
Copy Systems, Inc., Frederick, MD
CopyTech Business Systems, Inc., Harrison, OH
CPO, Limited, Santa Clara, CA
Crystal Computer, Winchester, MA
CT Solutions, Inc., Fairfield, CA
Ctronics, Stockton, CA
Cyber Resources, Mountainside, NJ
D.F. Blumberg Associates, Inc., Ft. Washington, PA
Data Exchange Corp., Camarillo, CA
Data General Corp., Westboro, MA
Dataprep (Malaysia) SDN.BHD
Deccaid Services, Inc., Deer Park, NY
DecisionOne, Menomonee Falls, WI
DecisionOne Corp Canada, Markham, ON
Dependable X-Ray Inc., Antioch, IL
Diagnostic Parts Exchange, Tallahassee, FL
Digidyne Inc., Lachine, Quebec
Digital Document Solutions, Orange, CT
Digital ES, Inc., Oklahoma City, OK
Docusource, Van Nuys, CA
DXR Imaging, Oakland, CA
EAD Systems Corp., Holbrook, MA
Edwards Business Machines, Inc., Bethlehem, PA
ESSC, Canada, Concord, ON
Express Copy & Tech, Indianapolis, IN
G.E. Walker, Inc., Tampa, FL
Galaxy Computer, St. Paul, MN
Garrett Med-Tech, Inc., Aurora, CO
GEAC Computers, Markham
Genicom Corp., Chantilly, VA
Getronics Service, 1092 AB Amsterdam
Graphic Corporation, Birmingham, AL
Great Eastern Technology, Cambridge, MA
GTE Services, Needham, MA
Hahn & Company, Portland, OR
Halifax Engineering, Inc., Alexandria, VA
HealthTech Pub. Co. Inc., E. Providence, RI
Hospital Shared Services, Denver, CO
BE Digital, Cerritos, CA
IET Intelligent Electronics, Burlington, MA
Imaging Diagnostics, Inc., Goodlettsville, TN
Imtek Office Solution, Inc., Pasadena, MD
Innoserv Technologies, Inc., Arlington, TX
Integration Technologies Gp., Inc., Falls Church, VA
International Bandwidth Services, San Juan Capistrano, CA
J&S Medical Assoc., Natick, MA
Kennsco, Inc., Plymouth, MN
Kinetic Biomedical, Erie, PA
Labcare Services, Sacramento, CA
LFC Capital, Inc., Chicago, IL
Lockhead Martin Comm Sys & Srv., Dearborn, MI
Maintech, Wallington, NJ
Maintenance Alternatives Corp., Petalund, CA
Maintenance Plus Inc., Roselle Park, NJ
Mararthan Services, Inc., Westlake Village, CA
Marcon Services Ltd., Wichita, KS
Matlock Medical Imaging, Inc., Durham, NC
Medelex, Inc., Sunnyvale, CA
Medical Imaging Service, Inc., Jefferson, LA
Medical Imaging Technologies Svcs., Inc., Ettalong Beach NSW
Medical Systems Engineering, San Francisco, CA
MEDTRON Inc., Free Port, NY
MTI Technology, Anaheim, CA
National Customer Engineering, San Diego, CA
National MD, Cleveland, OH
Nationwide Technologies, Inc., Lake Forest, IL
New England Systems, Inc., Middlebury, CT
Nexor System Service OY, Helsinki
North American Imaging, Camarillo, CA
Northrup Grumman GSS, Bohemia, NY
Novare Services, Inc., Cincinatti, OH
OneSource Services, Inc., Cleveland, OH
Picker, Lincolnshire, IL
Precision Medtech Services, Inc., Jessup, MD
Preferred CT Services, Palo Alto, CA
Preferred Diagnostic Equipment, Riverside, CA
Professional Copy Systems, Salt Lake City, UT
Qr Systems, Inc., San Antonio, TX
R.P. Kincheloe Company, Dallas, TX
Radiology Services, Inc., Georgetown, MA
Radiology Services of P.R., Cidra, Puerto Rico
Recognition Service Div., Irving, TX
Red Lion Medical Safety, Newark, DE
Remedpar, Goodlettesville, TN
Reprographic Systems, Inc., Urbandale, IA
Revacomp, Inc., Houston, TX
RPI Inc., Chatsworth, CA
S.O.M.A. Inc., Philadelphia, PA
Safety Anesthesia Eqpt Srvs Inc., Flora Park, NY
Safety Anesthesia Equipment Sv., Floral Park
Scantron FPD, Omaha, NE
Service Results Technology, Markham, ON
Service Technologies Inc., Atlanta, GA
Serviscope Corporation, Wallingford, CT
Shields Business Solutions, Cinnaminson, NJ
SMS System Maintenance Svcs, Inc., Littleton, MA
SoftTech Solutions, Waterford, MI
Southeast Imaging Systems, Inc., Apopka, FL
Sunton Industries, Inc., Hollywood, FL
Technical Duplicator Services, Inc., Anaheim, CA
Technical Dynamics, Annandale, VA
Technical Equipment Services, Inc. San Diago, CA
Tecspec, Inc., San Diego, CA
Telos Corporation, Bountiful, UT
The Exchange Corp., Atlanta, GA
The Thomas Group, Anaheim, CA
Thijssen Field Service B.V., Veenedaal
Toshiba America Medical, Tustin, CA
U.S. Computer Group, Farmingdale, NY
U.S. Medical, Cincinnati, OH
Unisys Canada, ON
Universal Financial, Elmhurst, IL
Vanstar, Atlanta, GA
Vision Medical Services, Ontario, CA
Vitronics, Inc., Eatontown, NJ
World Data Products, Minnetonta, MN
X-Tech Systems, Goleta, CA
Xerographic Copier Services, Inc., San Antonio, TX
Xeographic Corporation, Atlanta, GA

Exhibit C

United States District Court, Southern District of New York

    United States of America, Plaintiff, against International 
Business Machines Corporation, Defendant. 52 Civ. 72-344 (TPG).

Order

    On May 1, 1997 this Court approved an agreement between plaintiff 
and defendant providing for the termination of the remaining provisions 
of a 1956

[[Page 67934]]

consent decree in stages, with the final provisions ending in the year 
2002.
    Independent Service Network International (``ISNI'') moves to 
intervene for purposes of appeal. The motion is granted.
    ISNI is an organization of computer repair companies. Part of the 
business of these companies is to compete with IBM for the repair of 
IBM computers. At an earlier stage in the litigation, Judge Schwartz of 
this Court denied ISNI's motion to intervene. United States v. 
International Business Machines Corp., No. 72-344, 1995 WL 366383 
(S.D.N.Y. June 19, 1995). Later, when the termination agreement had 
been arrived at and was before the Court for approval, the undersigned, 
to whom the case had been reassigned, permitted ISNI to appear as 
amicus curiae. ISNI thereafter filed papers objecting to the 
termination agreement, and presented argument at the hearing. The 
Court's opinion of May 1 dealt in substantial part with ISNI's 
contentions. Although the Court rejected these contentions, they surely 
deserved the attention of the Court.
    ISNI has a legitimate interest in appealing from the May ruling, 
and it is in the public interest to allow ISNI to appeal. Under these 
circumstances the Court has discretion to allow ISNI to intervene under 
Fed. R. Civ. P. 24(b)(2). See United States v. American Cyanamid Co., 
556 F. Supp. 357, 361 (S.D.N.Y. 1982), aff'd, 719 F.2d 558 (2d Cir. 
1983).
    Accordingly, the Court directs that ISNI is permitted to intervene. 
This is solely for the purpose of appealing the May 1 ruling. ISNI will 
be denominated an ``Objector.'' There is no need to amend the caption 
of the case.
    So Ordered.

    Dated: New York, New York, June 26, 1997.
Thomas P. Griesa,
U.S.D.J.

Exhibit D

343rd Story of Level 2 Printed in Full Format

Copyright 1994 Business Wire, Inc., Business Wire

August 2, 1994, Tuesday.
Distribution: Business Editors/Medical Writers
Length: 356 words
Headline: ANMR and GE Medical Systems expand alliance to include 
very high field Magnetic Resonance Systems
Dateline: Wilmington, Mass.
Body:

    August 2, 1994--Advanced NMR Systems Inc. (NASDAQ NM:ANMR) 
announced Tuesday that it had concluded an agreement that expands 
its strategic alliance with GE Medical Systems (GEMS).
    Under the agreement ANMR will be the system integrator of very 
high field (3T and 4T) Magnetic Resonance Systems based on the GEMS 
Signa MR product. In addition to system integration, ANMR will also 
supply any special order design and manufacturing capability. The 
agreement covers a 3-year period through June 30, 1997.
    Under the agreement, 3T and 4T MR Systems will be made available 
to research institutions as investigational devices for research 
purposes. Revenues from this agreement will contribute to satisfying 
the GEMS obligation under the 1993 contract covering the ANMR 
InstaScan product (currently marketed by GEMS as SR-100). GEMS 
exclusivity on the InstaScan product will expire at the end of 1994.
    The companies further announced that they were continuing 
discussions on a series of other collaborations which could result 
in additional agreements.
    ``There have been inquiries from research sites requesting that 
we provide a very high field MR research system based on the Signa 
product with the option of adding the InstaScan EPI system. This 
eventuality was anticipated in the original agreement. It is a great 
example of two organizations, each with added value, working 
together,'' said Paul J. Mirabella, general manager, Global MR 
Business for GEMS.
    Jack Nelson, chairman and chief executive officer of ANMR, said, 
``Our expanded alliance with GEMS allows us to provide the most 
sophisticated technology to the world's most prestigious research 
centers. This agreement recognizes our wish to exclusively 
manufacture higher field systems for GEMS while releasing ANMR to 
market InstaScan systems and/or retrofits via multiple OEM 
agreements after December 31, 1994.''
    Contact: South Coast Communications, Joseph Allen, 714/252-8440 
or Advanced NMR Systems, Shareholders Relations, 201/592-8838.

Language: English.
Load-Date: August 3, 1994.

Exhibit E

320th Story of Level 2 Printed in Full Format

Copyright 1995 Information Access Company, a Thomson Corporation 
Company, IAC (SM) Newsletter Database (TM), The Business Word, Inc., 
Hospital Materials Management

June, 1995.
Section: No. 6, Vol. 20; ISSN: 0888-3068
Lenght: 182 words
Headline: Columbia/HCA Signs Five-Year Deal With GE Medical Systems
Body:

    Columbia/HCA Healthcare Corp., Nashville, Tenn., signed a five-
year agreement with General Electric Medical Systems, Waukesha, 
Wis., that covers the sales, service and utilization of all 
diagnostic imaging equipment in the 320-hospital chain. The deal may 
signal future partnerships between hospitals and equipment 
companies.
    The contract also gives GE responsiblity for providing Columbia/
HCA with recommendations on new equipment purchases. Columbia/HCA 
will provide GE with information on when and why equipment needs to 
be replaced for every piece of equipment the system owns.
    It is extremely difficult to place a dollar value on the 
contract, and no one can say how it will affect the 200 to 250 
independent service vendors that worked on Columbia/HCA's equipment 
prior to the agreement. Another question, not yet answered, is 
whether GE and Columbia will take the agreement beyond imaging 
equipment to other areas in the chain.
    If the concept takes hold, the industry will likely see more 
manufacturers enter not this double role.
    Copyright 1995 The Business Word, Inc.

Language: English
IAC-ACC-NO: 2805689 ND
Load-Date: October 25, 1995

Exhibit F

1st Story of Level 1 Printed in Full Format

Copyright 1996 Plain Dealer Publishing Co., The Plain Dealer

February 21, 1996 Wednesday, Final/All.
Section: Business; Pg. 2C
Length: 271 words
Headline: Medical Maintenance Firm Gains Scope With Purchase
Byline: By Marcus Gleisser; Plain Dealer Reporter
Body:

    GE Medical Systems of Milwaukee acquired National Medical 
Diagnostics Inc. of Warrensville Heights yesterday.
    With this move, GE grows from specializing in the maintenance of 
diagnostic equipment to the broader area of handling a wide variety 
of high-tech medical equipment.
    National Medical was owned by group of venture capital investors 
including KeyCorp., Morgenthaler, Primus, PNC Bank of Pittsburgh, 
and Canaan Venture Partners of New Canaan, Conn.
    It will become a wholly owned subsidiary of GE Medical, 
retaining its name, location and employee structure, said Ray 
Dalton, National MD chief executive.
    ``We expect to grow substantially as a result of this move and 
will be adding more jobs here,'' Dalton said.
    Both parties declined to give the dollar value of the 
transaction.
    National Medical began serving a single hospital in the Denver 
area four years ago. It took off wildly, said Dalton, until now it 
provides maintenance and repair services to some 220 hospitals in 23 
states.
    From a first engineering-service contract worth $250,000 the 
Cleveland company has grown to more than $22 million in annual 
revenues and more than 200 employees.
    For a fixed price, the company provides maintenance, repair, 
testing, calibration and other services for a hospital's entire 
array of medical equipment, including X-ray machines, life-support 
systems, CT scanners, computers and related telecommunications 
equipment.
    In many cases, the company replaces the need for separate 
service contracts involving many different outside vendors. The one-
stop maintenance often saves hospitals a considerable amount.

Language: English
Load-Date: February 22, 1996

[[Page 67935]]

Exhibit G

227th Story of Level 2 Printed in Full Format

Copyright 1996 Medical Data International, Inc., Medical Industry Today

August 27, 1996, Tuesday.
Section: Mergers & Acquisitions
Length: 303 words
Headline: GE Medical Systems Acquires Assets of Two Companies
Body:

    GE MEDICAL SYSTEMS (Milwaukee, WI), a business of General 
Electric Company, has agreed to acquire the U.S. healthcare assets 
of Specialty Underwriters (SU) and Maintenance Management (MMC), GE 
Medical Systems announced in a release Monday.
    Terms of the agreement were not disclosed.
    Specialty Underwriters, a private firm based in Oak Creek, WI, 
was founded in 1982. It sells equipment maintenance insurance to 
healthcare and other industries. Maintenance Management provides on-
site maintenance services for hospitals' and clinics' medical and 
office equipment.
    ``The acquisition of Specialty Underwriters' healthcare 
operations will help bolster GE Medical Systems' efforts in the 
multivendor service business. Our multivendor service offerings 
provide healthcare providers with a more efficient solution for 
managing and servicing hundreds and often thousands of pieces of 
clinical and biomedical equipment across their departments,'' said 
Tom Dunham, vice president and general manager of GE Medical 
Systems-Americas Service. ``As a one-stop-shop alternative, we 
reduce customers' overall maintenance costs while ensuring 
consistent, high quality.''
    Said Michael H. Polaski, founder and president of Specialty 
Underwriters and Maintenance Management, ``The healthcare portion of 
our business has been very successful and should thrive as part of 
GE Medical Systems, whose entire focus is healthcare solutions. 
After the sale, we will continue to apply the successful formula we 
developed with SU and MMC to maintenance activities in other 
industries. Capital from this transaction will enable us to 
accelerate our plans to develop new products and enter new 
markets.''
    GE Medical Systems is a leading provider of diagnostic imaging 
systems and related services.

Contact: Laurie Bernardy (414/544-3530)
Language: English
Load-Date: September 02, 1997

Exhibit H

1st Story of Level 1 Printed in Full Format

Copyright 1997 Business Wire, Inc., Business Wire

August 19, 1997, Tuesday.
Distribution: Health/Medical Writers or Business Editors
Length: 356 words
Headline: GE Medical Systems Invests $5.1 Million for Acquisition of 
Securities of Advanced NMR Systems, Inc. and Advanced NMR Systems, 
Inc.'s 3T and 4T Whole Body Imaging Business
Dateline: Wilmington, Mass.
Body:

    19, 1997--Advanced NMR Systems Inc. (NASDAQ:ANMR) and GE Medical 
Systems jointly announced today that GE has invested $5.1 million of 
the acquisition of $2.7 million of ANMR preferred stock, convertible 
at $0.233 per share, and for the acquisition of ANMR's 3-tesla and 
4-tesla whole body magnetic resonance imaging business. The 
companies had previously collaborated in the development of these 
systems. GE Medical Systems will continue to develop, manufacture, 
sell and service the 3T and 4T whole body imaging systems, and will 
also acquire ANMR's business of servicing 1.5T systems.
    In announcing the transaction, Jeffrey R. Immelt, president and 
chief executive officer of GE Medical Systems, said, ``GE Medical 
Systems is excited about assuming sole responsibility for this 3T 
and 4T whole body imaging business, and we are committed to 
providing products and service to the developing market in 3T and 4T 
whole body imaging systems. We are also pleased with the opportunity 
to build upon our strategic relationship by becoming an ANMR 
shareholder.''
    Jack Nelson, chairman and chief executive officer of Advanced 
NMR Systems Inc. said, ``This transaction further strengthens our 
balance sheet and positions us to concentrate on our future growth 
following our proposed merger with Advanced Mammography Systems. We 
are delighted to have GE as a significant investor in the company.''
    Advanced NMR Systems Inc. and Advanced Mammography Systems Inc. 
(NASDAQ:MAMO) have executed a definitive agreement to merge. 
Advanced NMR Systems Inc. is awaiting SEC clearance of proxy 
material and a related registration statement for subsequent 
approval of shareholders for the merger.
    Contact: Advanced NMR Systems Inc., Beverly Tkaczenko, 800/476-
0569 or GE Medical Systems, Charles Young, 414/544-3530.

Language: English
Load-Date: August 20, 1997

Exhibit I

82nd Story of Level 2 Printed in Full Format

Copyright 1997 Business Wire, Inc., Business Wire

December 1, 1997, Monday.
Distribution: Business Editors, Health/Medical Writers
Length: 549 words
Headline: GE Medical Systems and INPHACT Form Strategic Alliance; 
Five-Year Joint Marketing Pact Could Generate $100 Million In 
Revenues
Dateline: Nashville, Tenn.
Body:

    Dec. 1, 1997--General Electric Medical Systems, the world's 
leading manufacturer of diagnostic imaging equipment, and INPHACT, a 
Nashville-based provider of on-line radiology services for 
radiologists and health care facilities, have forged a give-year 
``Strategic Alliance,'' The national agreement designates GE as an 
INPHACT preferred vendor and establishes joint marketing efforts 
that could generate more than $100 million in GE equipment and 
INPHACT service revenues during the contract period. INPHACT, which 
currently serves radiologists and health care facilities in seven 
states, will receive preferred purchase and service options on GE 
equipment for new client installations or upgrades for its existing 
clients. GE will help to jointly market INPHACT's 24/7 on-call image 
interpretation service, digital image transmission & archiving and 
physicians' practice management services to its current and new 
physician and facility clients, and INPHACT will help to jointly 
market GE's Integrated Imaging Services (``IIS'') for networking 
(PACS) products and services. ``INPHACT has developed leading-edge 
services that can help radiologists and health care facilities 
deliver radiology services more efficiently and cost effectively,'' 
said Tony Lombardo, General Manager of Sales for GE IIS. ``INPHACT 
has made our integrated imaging solutions (IIS) products and 
services an important element in its service platform, which results 
in reduction of duplicate studies, elimination of lost files, 
decreased maintenance costs and faster diagnoses for its clients,'' 
``GE has already played an integral part in helping INPHACT develop 
our state-of-the-art on-line radiology services,'' said Jeffrey A. 
Landman, M.D., chairman and chief executive officer of INPHACT. 
``GE's ongoing commitment to INPHACT and our clients assures that we 
will continue to be at the forefront of helping radiologists and 
health care facilities provide more in-depth service while reducing 
their costs.'' Founded in 1996, INPHACT (www.inphact.com) is a 
privately-held provider of on-line radiology and practice management 
services that currently serves radiologists and health care 
facilities in seven states. Earlier this year, the company 
introduced the Virtual Partner program, which offers a unique blend 
of 24/7 on-call image interpretation, practice management and equity 
partnership to radiologists. INPHACT also offers health care 
facilities 24-hour consulting, system design, digital image 
transmission and archival services. GE Medical Systems (GEMS), a 
business of General Electric Company, develops and produces 
diagnostic imaging equipment in several modalities, including X-ray, 
Mammography, Magnetic Resonance, Computed Tomography, Ultrasound, 
Nuclear Medicine Imaging and PET. GEMS also provides a variety of 
services--from networking to biomedical equipment maintenance. GE 
Medical Systems has annual sales of approximately $4 billion and 
employs more than 15,000 people worldwide.
    Contact: Katcher Vaughn & Bailey Communications, Roy Vaughn, 
Lisa Achilles, 615/248-8202.
    Today's News On The Net--Business Wire's full file on the 
Internet, with Hyperlinks to your home page.

URL: http://www.businesswire.com

Language: English
Load-Date: December 2, 1997

[[Page 67936]]

Exhibit J

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 325 7th Street, N.W., Suite 300, Washington, D.C. 20530, 
Plaintiff, v. General Electric Company, 3135 Easton Turnpike, 
Fairfield, Connecticut 06431, and InnoServ Technologies, Inc., 320 
Westway, Suite 530, Arlington, Texas 76018, Defendants. Case Number 
1:98CV01744. Judge: Royce C. Lamberth. Deck Type: Antitrust. Date 
Stamp: 07/14/98.

Complaint

    The United States of America, acting under direction of the 
Attorney General of the United States, brings this civil action to 
obtain equitable relief against defendants and alleges as follows:
    1. The United States brings this antitrust case to block the 
proposed acquisition of InnoServ Technologies, Inc. (``InnoServ'') by 
General Electric Company (``GE''). GE is the largest manufacturer of 
medical imaging equipment, such as CT scanners and magnetic resonance 
imagers (MRIs), and is the leading service provider of GE imaging 
equipment. InnoServ is one of the nation's largest independent service 
organizations (``ISOs'') and has significant expertise and capabilities 
and competes with GE in servicing certain GE imaging equipment. GE and 
InnoServ also compete in numerous local markets for comprehensive 
multi-vendor and asset-management services (``multi-vendor service''), 
in which they contract to provide services relating to some or all of a 
hospital's capital equipment--including imaging and non-imaging medical 
equipment--regardless of manufacturer. The competition between GE and 
InnoServ in these markets has reduced prices significantly for imaging 
equipment service.
    2. To help service its imaging equipment, GE has developed advanced 
diagnostic software that it uses to calibrate, maintain, and service 
more quickly a particular model of imaging equipment. InnoServ is one 
of very few companies that has developed its own proprietary diagnostic 
software (called ``PREVU'') for servicing certain GE imaging equipment. 
Although it is not as sophisticated or efficient as GE's own software, 
PREVU has made InnoServ an effective competitor to GE in the markets 
for servicing certain models of GE imaging equipment on a discrete, 
machine-by-machine basis, as well as in markets for providing multi-
vendor service to hospitals that own GE equipment.
    3. If GE acquires InnoServ, GE will increase its already high share 
in the markets for servicing certain models of GE imaging equipment on 
a discrete basis, particularly several models of CT scanners and MRIs, 
and it will eliminate an effective competitor in these markets. It will 
also substantially reduce competition in multi-vendor service markets. 
Unless blocked, this acquisition likely will result in higher prices 
for imaging equipment maintenance and service.
I. Jurisdiction and Venue
    4. The United States files this action under Section 15 of the 
Clayton Act, as amended, 15 U.S.C. Sec. 25, to prevent and restrain the 
defendants from violating Section 7 of the Clayton Act, as amended, 15 
U.S.C. Sec. 18.
    5. Both GE and InnoServ service medical imaging equipment in 
interstate commerce, and the operations of their medical equipment 
service businesses affect and are in the flow of interstate commerce. 
This Court has subject matter jurisdiction over the action and the 
parties pursuant to Section 12 of the Clayton Act, 15 U.S.C. Sec. 22, 
and 28 U.S.C. Secs. 1331 and 1337.
    6. The defendants transact business and are found within the 
District of Columbia. Venue is proper in this District under 15 U.S.C. 
Sec. 22 and 28 U.S.C. Sec. 1391(c).
II. The Defendants
    7. GE is a New York corporation headquartered in Fairfield, 
Connecticut. GE is a diversified technology, manufacturing, and 
services company. In 1997, GE's total revenues exceeded $90 billion. 
Its wholly owned subsidiary, General Electric Medical Systems 
(``GEMS''), located in Waukesha, Wisconsin, manufactures medical 
imaging equipment such as CT scanners, MRIs, x-ray equipment, and 
nuclear-medicine cameras. GEMS is the leading service provider of 
imaging equipment manufactured by GE. Since 1994, GEMS has also 
serviced imaging equipment manufactured by other companies through GE 
HealthCare Services, its multi-vendor service group.
    8. InnoServ is a California corporation headquartered in Arlington, 
Texas. InnoServ provides various forms of multi-vendor service to 
radiology, cardiology, biomedical, and laboratory departments of 
hospitals and other healthcare providers. In fiscal year 1997, 
InnoServ's total service revenues exceeded $37 million.
III. Trade and Commerce
A. Relevant Product Markets
1. Service of GE Imaging Equipment on a Discrete Basis
    9. Hospitals, physicians, and other health care providers use 
various types (sometimes referred to as ``modalities'') of medical 
imaging equipment, such as CT scanners, MRIs, and nuclear cameras, to 
create images of the body's internal structure. Each modality of 
imaging equipment employs different technologies and generally is not 
interchangeable with any other. For example, an MRI is better suited 
than a CT scanner for imaging soft tissue, and a CT scanner can 
disclose a tumor that less sophisticated x-ray equipment cannot detect.
    10. GE is the largest manufacturer of imaging equipment and sells 
various modalities of such equipment throughout the United States. For 
each modality, GE often has sold multiple models, particularly as it 
improves upon the equipment. Since 1987, GE has sold at least the 
following CT scanner models: the CT Max; the 9800/Quick; the 9800 
Hilight Advantage; and the Hispeed Advantage.
    11. Imaging equipment requires regular service, including 
preventive maintenance, general repairs, and emergency service. Health 
care providers spend over $3 billion each year to service and repair 
imaging equipment.
    12. The sale of service for each model of imaging equipment is a 
separate product market. A hospital or clinic that owns a GE 9800/Quick 
CT scanner requiring service does not have any reasonable substitute to 
purchasing service for that equipment. Purchasing service for another 
piece of imaging equipment--for example, an ultrasound machine, which 
is used for very different kinds of medical diagnoses--is not a 
alternative. If faced with a small but significant increase in the 
price of servicing the GE 9800/Quick, most hospitals would not forego 
purchasing service for that model. The same is true for other models of 
GE imaging equipment.
    13. Historically, after the warranty on a piece of GE imaging 
equipment has expired, hospitals and other owners of the equipment have 
entered into discrete contracts with a service provider for that 
equipment. GE and InnoServ compete to sigh such discrete service 
contracts for several different models of GE imaging equipment. If 
faced with a small but significant increase in the price of servicing a 
GE 9800/Quick CT scanner, most hospitals

[[Page 67937]]

preferring discrete service contracts would not switch to a multi-
vendor service contract covering all of their imaging equipment. The 
same is true for other models of GE imaging equipment.
    14. The service for certain models of GE imaging equipment on a 
discrete, machine-by-machine basis is a line of commerce and a relevant 
product market within the meaning of the Clayton Act.
2. Multi-vendor Service
    15. In recent years, rather than have numerous discrete service 
contracts with several different equipment manufacturers or ISOs, some 
hospitals have chosen to contract with a single provider to service 
most or all of the hospital's equipment. Such multi-vendor service 
contracts may include service for all of a hospital's imaging 
equipment--regardless of manufacturer, modality, or model. They may 
also include service for all of the hospital's non-imaging medical 
equipment, such as biomedical and laboratory equipment. In some cases, 
hospitals also contract with a single entity for all of the hospital's 
capital equipment needs, including advice on capital equipment 
replacement decisions (``asset management''). Corporations owning a 
large number of individual hospitals, in particular, find this ``one-
stop shopping'' approach an efficient method of purchasing service for 
their imaging (and often non-imaging) equipment. Both GE and InnoServ 
compete with one another and with other service providers to obtain 
such multi-vendor and asset management (defined herein as ``multi-
vendor service'') contracts. Hospitals preferring to purchase multi-
vendor service do not have reasonable alternatives to such contracts. 
If faced with a small but significant increase in the price of multi-
vendor service, most of those hospitals would not switch to purchasing 
service on a discrete basis.
    16. Multi-vendor service is a line of commerce and a relevant 
product market within the meaning of the Clayton Act.
B. Relevant Geographic Markets
    17. The geographic markets for imaging equipment service are local, 
with the precise contours of those markets differing depending on the 
type of equipment involved and other factors. Hospitals strongly prefer 
to contract with nearby service providers, where such providers are 
qualified and able to service the equipment involved. In general, 
service providers located closer to the hospital customer can respond 
to service emergencies more quickly, thereby minimizing the amount of 
time during which the hospital's imaging equipment is not working. A 
hospital can lose substantial revenue if its imaging equipment is 
broken; in some cases, patients may need to be transferred to other 
health care facilities due to equipment failure. Therefore, given the 
importance of timely service, service providers located relatively far 
away from a hospital are at a substantial disadvantage in competing to 
service that hospital. If faced with a small but significant increase 
in the price of service from its local service provider, most hospitals 
would not switch to using a service provider located relatively far 
away.
    18. GE offers both service contracts for discrete pieces of GE 
imaging equipment and multi-vendor service contracts throughout the 
United States. InnoServ offers similar services within a radius of 
about 100 miles of several large metropolitan areas.
    19. Each local area in which GE and InnoServ are both sufficiently 
close to a hospital customer to provide timely imaging equipment 
service is a section of the country and a relevant geographic market 
within the meaning of the Clayton Act.
C. Anticompetitive Effect and Entry
    20. GE and InnoServ compete in numerous local markets for servicing 
certain models of GE imaging equipment on a discrete basis and for 
multi-vendor service. In many of these markets, InnoServ is one of the 
few ISOs that has specialized in servicing GE imaging equipment. 
Moreover, GE and Innoserv were among the first service providers to 
offer comprehensive multi-vendor service; each signed a contract to 
provide such service to a large customer in 1995. Particularly because 
InnoServ is one of very few companies that has developed its own 
proprietary diagnostic software for GE imaging equipment, consumers in 
both discrete service markets and multi-vendor service markets view 
InnoServ service as a good substitute for GE service. The competition 
between GE and InnoServ in these markets has resulted in significant 
price reductions for consumers. GE's acquisition of InnoServ would 
eliminate this competition and increase GE's already high share in the 
markets for servicing certain models of GE imaging equipment, 
particularly several models of CT scanners and MRIs. It would also 
substantially reduce competition in multi-vendor service markets.
    21. Successful entry into the relevant markets is difficult, time 
consuming, and costly. In general, customers prefer to purchase service 
from existing, reputable firms in the industry. Therefore, new entrants 
often find it difficult to enter on a scale necessary to succeed 
financially.
IV. Violation Alleged
    22. On May 19, 1998, GE and InnoServ signed an Agreement and Plan 
of Merger under which GE intends to acquire the common stock of 
InnoServ for a purchase price of $16 million.
    23. GE's proposed acquisition of InnoServ is likely to lessen 
competition substantially and tend to create a monopoly in interstate 
trade and commerce in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec. 18.
    24. The transaction likely will have the following effects, among 
others:
    a. Actual and future competition between GE and InnoServ will be 
eliminated in the markets for servicing certain models of GE imaging 
equipment on a discrete, machine-by-machine basis in numerous local 
markets throughout the United States;
    b. Competition generally in the markets for servicing certain 
models of GE imaging equipment on a discrete, machine-by-machine basis 
in numerous local markets throughout the United States will be lessened 
substantially;
    c. Actual and future competition between GE and InnoServ will be 
eliminated in the markets for multi-vendor service in numerous local 
markets throughout the United States; and
    d. Competition generally in the markets for multi-vendor service in 
numerous local markets throughout the United States will be lessened 
substantially.
V. Requested Relief
    The United States requests:
    1. That the proposed acquisition by GE of InnoServ be adjudged to 
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. Sec. 18;
    2. That GE and InnoServ be permanently enjoined from carrying out 
GE's intended acquisition of the common stock of InnoServ as expressed 
in the Agreement and Plan of Merger dated May 19, 1998, and from 
carrying out any agreement, understanding, or plan, the effect of which 
would be to combine the businesses or assets of GE and InnoServ;
    3. That the United States be awarded its costs of this action; and
    4. That the United States have such other relief as the Court may 
deem just and proper.


[[Page 67938]]


    Dated: July 14, 1998.
Joel I. Klein,
Assistant Attorney General.
John M. Nannes,
Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.

    Respectfully submitted,
Jon B. Jacobs (D.C. Bar #412249), Fred E. Haynes (D.C. Bar #165654), 
Joan H. Hogan (D.C. Bar #451240), Peter J. Mucchetti,
Attorneys, Antitrust Division, 325 7th Street, N.W., Suite 300, 
Washington, D.C. 20530, (202) 514-5012.
M.J. Moltenbrey,
Chief, Civil Task Force.
Susan L. Edelheit,
Assistant Chief, Civil Task Force.

Appendix 3

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 325 7th Street, N.W., Suite 300, Washington, D.C. 20530, 
Plaintiff, v. General Electric Company, 3135 Easton Turnpike, 
Fairfield, Connecticut 06431, and InnoServ Technologies, Inc., 320 
Westway, Suite 530, Arlington, Texas 76018, Defendants. Case Number 
1:98CV01744. Judge: Royce C. Lamberth.

Supplemental Public Comment of Independent Service Network 
International Pursuant to 15 U.S.C. Sec. 16(b),(d)

    Because of an event that occurred after Independent Service Network 
International (``ISNI'') submitted its public comment yesterday. ISNI 
submits this short supplemental comment pursuant to the Antitrust 
Procedures and Penalty Act (``APPA''), 15 U.S.C. Sec. 16(b), (d). The 
new event, which occurred today, is GE Medical Systems' (``GEMS'') 
issuance of the attached news release stating that ``* * * it has 
completed its acquisition of InnoServ Technologies, Inc * * *.''
    This press release completely undermines and disrespects the 
processes of the APPA for several reasons. First, it makes a sham of 
the public comment period if the very act that the Government's 
complaint challenged occurs during that period.
    Second, one of the purposes of the public comment period is to 
provide the United States with more information. Based on this 
information, the United States has the right to withdraw its consent 
from the decree, 63 FR 39894. The fact that the defendants have 
presented the United States with a fait accompli has the obvious 
purpose of making the withdrawal of consent more difficult.
    Finally, this Court, not the parties, has the final authority to 
approve the proposed consent decree. For GEMS to say that it has 
``completed'' its acquisition of InnoServ Technologies ignores that 
salient fact.

    Dated: September 16, 1998.

        Respectfully submitted,
Ronald S. Katz, Esq.,
General Counsel, ISNI, Coudert Brothers, 4 Embarcadero Center, Ste. 
3300, San Francisco, CA 94111, Telephone: 415-986-1300.

Appendix 4

Star Technologies

Via Facsimile and First Class Mail
(202) 307-9952

September 16, 1998.
Ms. Mary Jean Moltenbrey,
Chief, Civil Task Force, Antitrust Division, U.S. Department of 
Justice, 325 Seventh Street, N.W., Suite 300, Washington, DC 20530

    Dear Ms. Moltenbrey: This letter is in response to the request 
for public comments on the proposed settlement of the government's 
action blocking the acquisition of InnoServ Technologies, Inc. by 
General Electric Co. In accordance with the proposed settlement, GE 
is required to sell InnoServ's PREVU software to a third party 
approved by the Justice Department. The software's buyer could then 
use PREVU in its service business, or resell or license PREVU to 
other parties. Because Star Technologies believes that PREVU either 
contains software developed by it or that portions of PREVU were 
derived from such software, approval of the sale of PREVU must 
address the assignment of transfer of Star's underlying software.
    By way of background, Star Technologies was founded in 1981 as a 
manufacturer of array processors, which are devices used in 
conjunction with general-purpose computers to accelerate the 
processing of large amounts of numerical data. While the earliest 
applications for Star's array processors were in oil exploration, 
other applications included molecular modeling, and signal and 
imaging processing. Beginning in 1984, Star began selling its array 
processors to General Electric Medical Systems for use in GE's CT 
scanners. Independently from its business relationship with GE, 
which constituted a substantial amount of Star's business for 
several years, Star developed various versions of diagnostic 
software for testing its array processors. The version of software 
of concern now is known as ``Star Maintenance Software'' or ``SMS.'' 
Although developed primarily for internal use, Star has licensed SMS 
to numerous customers solely for their own internal use.
    Among the customers to whom Star licensed SMS were several firms 
that perform third-party maintenance on GE's CT scanners. They use 
SMS to diagnose only the array processor elements designed and 
manufactured by Star that are a component of the GE CT scanners. 
While InnoServ is currently a customer of Star's for the repair of 
circuit boards used in Star's array processors. InnoServ has not 
licensed SMS from Star.
    In recent discussions with Mr. Philip Cannon, Star's Vice 
President of Technology, Ms. Cathy Donovan, InnoServ's Manager of 
Technical Support, acknowledged that PREVU uses Star's diagnostic 
software, and also expressed her belief that such use was 
appropriately licensed by Star. Assuming that SMS was validly 
licensed from Star, any acquirer of PREVU would still need Star's 
consent to transfer or assign that license since SMS is an integral 
part of PREVU. Absent a valid existing license, the acquirer of 
PREVU must obtain a new license from Star for the SMS portion of the 
PREVU system.
    With respect to the licensing of SMS, Star is willing to support 
the appointed trustee in establishing with a prospective acquirer of 
PREVU an appropriate license for the use of Star's diagnostic 
software. In any event, Star wishes to be apprised of attempts to 
sell the PREVU software so that it can ensure that its intellectual 
property is protected from misuse. If you have any questions or 
desire additional information in this regard, please contact the 
undersigned at (301) 315-0240.

        Sincerely,

Star Technologies, Inc.

R.W. Tschippert,
Director of Contracts.

Certificate of Service

    This certifies that on November 17, 1998, I caused copies of the 
foregoing Response to Public Comments to be served as indicated upon 
the parties to this action and courtesy copies to be served as 
indicated upon each commenter:

By Hand

Richard L. Rosen, Esquire,
Arnold & Porter, 555 12th Street, Washington, D.C. 2004, Counsel for 
General Electric Company.
Malcolm R. Pfunder, Esquire,
Gibson, Dunn & Crutcher, LLP, 1050 Connecticut Ave., N.W., Washington, 
D.C. 20036, Counsel for Innoserv Technologies, Inc.

By Facsimile (Without Appendices) and First-Class Mail

Robert Compton,
Star Technologies, 1151 Seven Locks Road, Building A, Potomac, MD 
20854, (301) 315-0260 (facsimile).
Ronald S. Katz, Esquire,
Coudert Brothers, 4 Embarcadero Center, Suite 3300, San Francisco, CA 
94111, Counsel for Independent Service Network International, (415) 
986-0320 (facsimile).

Jon B. Jacobs

[FR Doc. 98-32147 Filed 12-8-98; 8:45 am]
BILLING CODE 4410-11-M