[Federal Register Volume 67, Number 117 (Tuesday, June 18, 2002)]
[Notices]
[Pages 41472-41481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15328]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Computer Associates International, Inc.; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment and 
Competitive Impact Statement have been filed with the United States 
District Court for the District of Columbia in United States of America 
v. Computer Associates International, Inc. and Platinum technology 
International, inc., Civil Action No. 1:01CV02062 (GK). On September 
28, 2001, the United States filed a Complaint alleging that the 
Defendants' conduct surrounding the acquisition of Platinum technology 
International, inc. by Computer Associates International, Inc. (CA) 
violated Section 1 of the Sherman Act (15 U.S.C. 1) and section 7a of 
the Clayton Act (15 U.S.C. 18(a)), commonly known as the Hart-Scott-
Rodino (``HSR'') Act. The Complaint alleges that the Defendants 
violated Section 1 of the Sherman Act by entering into an agreement 
that restricted Platinum's ability to offer price discounts to 
customers during the time period before they consummated their merger. 
The proposed Final Judgment enjoins CA and future merger partners from 
engaging in similar conduct. The proposed Final Judgment also requires 
that the Defendants pay a civil penalty to resolve the HSR Act 
violation. The civil penalty component of the proposed Final Judgment 
is not open to public comment. Copies of the Complaint, proposed Final 
Judgment and Competitive Impact Statement are available for inspection 
at the Department of Justice in Washington, DC, in Room 200, 325 
Seventh Street, NW., on the Department of Justice Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States 
District Court for the District of Columbia, 333 Constitution Avenue, 
NW., Washington, DC 20001.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments

[[Page 41473]]

should be directed to Renata B. Hesse, Chief, Networks & Technology 
Section, Antitrust Division, U.S. Department of Justice, 600 E Street, 
NW., Suite 9500, Washington, DC 20530 (telephone (202) 307-6200).

Dorothy B. Fountain,
Deputy Director of Operations.

United States District Court for the District of Columbia

[Civil No. 01-02062 (GK)]

United States of America, Plaintiff, v. Computer Associates 
International, Inc. and Platinum Technology International, Inc., 
Defendants

Stipulation and Order

    It is hereby stipulated by and between the undersigned parties, 
through their respective counsel, as follows:
    1. The Court has jurisdiction over the subject matter of 
plaintiff's Complaint alleging defendants Computer Associates 
International, Inc. (``CA'') and Platinum technology International, 
inc. (``Platinum'') violated section 1 of the Sherman Act (15 U.S.C. 1) 
and Section 7A of the Clayton Act (15 U.S.C. 18(a)), and over each of 
the parties hereto, and venue of this action is proper in the United 
States District Court for the District of Columbia. The defendants 
authorize Richard L. Rosen, Esq. of Arnold & Porter to accept service 
of all process in this matter on their behalf.
    2. The parties stipulate that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedure and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that Plaintiff has not withdrawn its consent, 
which it may do at any time before the entry of the proposed Final 
Judgment by serving notice thereof on defendants and by filing that 
notice with the Court.
    3. CA shall abide by and comply with the provisions of the proposed 
Final Judgment pending entry of the Final Judgment by the Court, or 
until expiration of time for all appeals of any Court ruling declining 
entry of the proposed Final Judgment, and shall, from the date of the 
signing of this Stipulation by the parties, comply with all the terms 
and provisions of the proposed Final Judgment as though they were in 
full force and effect as an order of the Court.
    4. The Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by the parties 
and submitted to the Court.
    5. In the event that Plaintiff withdraws its consent, as provided 
in paragraph 2 above, or in the event that the proposed Final Judgment 
is not entered pursuant to this Stipulation, the time has expired for 
all appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, then the 
parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    6. The parties' execution of this Stipulation and entry of the 
Final Judgment settles, discharges, and releases any and all claims of 
the plaintiff for civil penalties against:
    (a) Defendant CA, its directors, officers, employees, and agents, 
for failure to comply with the waiting period requirements of Sec. 7A 
of the Clayton Act, 15 U.S.C. 18(a), arising from the acquisition of 
Platinum by CA; and
    (b) Defendant Platinum, its directors, officers, employees and 
agents, for failure to comply with the waiting period requirements of 
Sec. 7A of the Clayton Act, 15 U.S.C. 18(a), arising from the 
acquisition of Platinum by CA.

    Respectfully submitted,

For Plaintiff, United States of America.

James J. Tierney (D.C. Bar No. 434610),
U.S. Department of Justice, Antitrust Division, Networks & 
Technology Section, 600 E Street, NW., Suite 9500, Washington, DC 
20530, Tel: (202) 307-0797, Fax: (202) 616-8544.

    Dated: April 23, 2002.

For Defendants, Computer Associates International, Inc. and Platinum 
Technology International, Inc.

Richard L. Rosen (D.C. Bar No. 307231),
Arnold & Porter, 555 Twelfth Street, NW., Washington, DC 20004-1206, 
Tel: (202) 942-5499, Fax: (202) 942-5999.

Order

    The Court having considered the parties' Joint Motion for Entry of 
Stipulation and Order, and upon consent of the parties,
    It is hereby ordered that defendants shall abide by and comply with 
all terms and provisions of the proposed Final Judgment pending 
compliance with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.

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Dated:

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United States District Court Judge

Parties Entitled to Notice of Entry of Order

Counsel for the United States

Renata B. Hesse, Esq.
James J. Tierney, Esq.
U.S. Department of Justice, Antitrust Division, Networks & 
Technology Section, 600 E Street, N.W., Suite 9500, Washington, D.C. 
20530, Tel: (202) 307-0797, Fax: (202) 616-8544

Counsel for Computer Associates International, Inc. and Platinum 
technology International, inc.

Richard L. Rosen, Esq.
Arnold & Porter, 555 Twelfth Street, N.W., Washington, D.C. 20004-
1206, Tel: (202) 942-5499, Fax: (202) 942-5999

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Computer Associates 
International, Inc.; and Platinum Technology International, Inc., 
Defendants

Final Judgment

    Whereas, Plaintiff United States of America filed its Complaint on 
September 28, 2001, alleging that Defendants Computer Associates 
International, Inc. (``CA'') and Platinum technology International, 
inc. (``Platinum'') violated Section 1 of the Sherman Act (15 U.S.C. 
1), and Section 7A of the Clayton Act (15 U.S.C. 18(a)), commonly known 
as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the ``HSR 
Act''), and Plaintiff and Defendants, by their respective attorneys, 
have consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against, or any admission by, any 
party regarding any such issue of fact or law;
    And whereas Defendant CA agrees to be bound by the provisions of 
this Final Judgment pending its approval by the Court;
    Now, therefore, before any testimony is taken, and without trial or 
adjudication of any issue of fact or law, and upon the consent of the 
parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states claims upon which 
relief may be granted against Defendants under Section 1 of the Sherman 
Act (15 U.S.C. 1), and section 7A of the Clayton Act (15 U.S.C. 18a).

II. Definitions

    As used in this Final Judgment:

[[Page 41474]]

    (A) ``Agreement'' means any agreement, understanding or plan, 
formal or informal, written or unwritten.
    (B) ``Bid'' means any bid, offer, or proposal, formal or informal, 
written or unwritten, to sell, lease, license, or otherwise supply any 
product or service, including, but not limited to, any such bid, offer, 
or proposal to renew, extend or otherwise revise any existing contract 
to provide any product or service.
    (C) ``Bid information'' means all information relating to any bid, 
including the names of prospective customers and the prices, terms or 
other conditions of sale.
    (D) ``CA'' means Defendant Computer Associates International, Inc., 
and its parents, subsidiaries (including Platinum technology 
International, inc.), successors and assigns, directors, officers, 
managers, agents, and employees, and any other person acting for, on 
behalf of, or under the control of them.
    (E) ``Person'' or ``party'' means any individual, partnership, 
firm, corporation, association, or other legal or business entity.
    (F) ``Pre-consummation period'' means the period of time between 
the signing of an agreement to acquire, directly or indirectly, any 
voting securities or assets of another person, and the earlier of the 
expiration or termination of the waiting period under the HSR Act or 
the closing of the acquisition transaction.

III. Applicability

    This Final Judgment applies to CA, including each of its directors, 
officers, managers, agents, employees, parents, subsidiaries, 
successors and assigns, and to all other persons in active concert or 
participation with any of them who have received actual notice of this 
Final Judgment by personal service or otherwise.

IV. Prohibited Conduct

    CA is enjoined, directly or indirectly, from entering into, 
maintaining or enforcing any agreement with an acquiring or to-be-
acquired person that, during the pre-consummation period:
    (A) establishes any price or discount for any product or service of 
the other party to be purchased, used or re-sold in the United States.
    (B) grants to one party to the transaction the right to negotiate, 
approve or reject any bid or customer contract for any product or 
service of the other party to be purchased, used or re-sold in the 
United States; and
    (C) requires a party to provide bid information to the other party 
for any product or service to be purchased, used or re-sold in the 
United States.

V. Permitted Conduct

    Nothing in Section IV shall prohibit CA and another party to a 
contemplated or proposed acquisition from:
    (A) Agreeing that the to-be acquired person during the pre-
consummation period shall continue to operate in the ordinary course of 
business consistent with past practices;
    (B) conditioning the transaction on a requirement that the to-be 
acquired person during the pre-consummation period not engage in 
conduct that would cause a material adverse change in the business;
    (C) agreeing that the to-be acquired person during the pre-
consummation period shall not offer or enter into any contract that 
grants any person enhanced rights or refunds upon the change of control 
of the to-be acquired person:
    (D) agreeing that either party may conduct reasonable and customary 
due diligence prior to closing the transaction, and conducting such due 
diligence. However, if CA and the other party are competitors for any 
service or product that is the subject of any pending bids, a party may 
obtain pending bid information of the other party for purposes of due 
diligence only to the extent that bids are material to the 
understanding of the future earnings and prospects of the other party 
and only pursuant to a non-disclosure agreement. This non-disclosure 
agreement must limit use of the information to conducting due diligence 
and must also prohibit disclosure of any such information to any 
employee of the party receiving the information who is directly 
involved in the marketing, pricing or sales of any product or service 
that is the subject of the pending bids;
    (E) submitting a joint bid to a customer where the joint bid would 
be lawful in the absence of the planned acquisition; and
    (F) entering into an agreement where CA and the other party to the 
transaction are or would be in a buyer/seller relationship and the 
agreement would be lawful in the absence of the planned acquisition.

VI. Compliance

    (A) CA shall maintain an antitrust compliance program which shall 
include designating, within thirty (30) days of entry of this order, an 
Antitrust Compliance Officer with responsibility for achieving 
compliance with this Final Judgment. The Antitrust Compliance Officer 
shall, on a continuing basis, supervise the review of current and 
proposed activities to ensure compliance with this Final Judgment. The 
Antitrust Compliance Officer shall be responsible for accomplishing the 
following activities:
    (1) distributing within forty-five (45) days of entry of this Final 
Judgment, a copy of this Final Judgment to each current officer an 
director, and each employee, agent or other person who has 
responsibility for or authority over mergers and acquisitions.
    (2) distributing in a timely manner a copy of this Final Judgment 
to any officer, director, employee or agent who succeeds to a position 
described in Section VI(A)(1);
    (3) obtaining within forty-five (45) days from the entry of this 
Final judgment, and annually thereafter, and retaining for the duration 
of this Final Judgment, a written certification from each person 
designated in Sections VI(A)(1) & (2) that he or she: (a) Has received, 
read, understands, and agrees to abide by the terms of this Final 
Judgment; (b) understands that failure to comply with this Final 
Judgment may result in conviction for criminal contempt of court; and 
(c) is not aware of any violation of the Final Judgment; and
    (4) providing a copy of this Final Judgment to each merger partner 
before the initial exchange of a letter of intent, definitive agreement 
or other agreement of merger.
    (B) Within sixty (60) days of entry of this Final Judgment, CA 
shall certify to Plaintiff that it has (1) designated an Antitrust 
Compliance Officer, specifying his or her name, business address and 
telephone number; and (2) distributed the Final Judgment in accordance 
with Section VI(A)(1).
    (C) For the term of this Final Judgment, on or before its 
anniversary date, CA shall file with Plaintiff an annual statement as 
to the fact and manner of its compliance with the provisions of 
Sections IV and VI.
    (D) If any CA director or officer or the Antitrust Compliance 
Officer learns of any violation of this Final Judgment, CA shall within 
three (3) business days take appropriate action to terminate or modify 
the activity so as to assure compliance with this Final Judgment, and 
shall notify the Plaintiff of any such violation within ten (10) 
business days.

VII. Plaintiffs Access and Inspection

    (A) For the purpose of determining or securing compliance with this 
Final Judgment, and subject to any legally recognized privilege, duly 
authorized representatives of the United States Department of Justice 
shall, upon

[[Page 41475]]

written request of a duly authorized representatives of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to CA, be permitted:
    (1) Access during CA's office hours to inspect and copy or at 
Plaintiff's option, to require CA to provide copies of all records and 
documents in its possession or control relating to any matters 
contained in this Final Judgment; and
    (2) to interview, either informally or on the record, CA's 
directors, officers, employees, agents or other persons, who may have 
their individual counsel present, relating to any matters contained in 
this Final Judgment. The interviews shall be subject to the reasonable 
convenience of the interviewee and without restraint or interference by 
CA.
    (B) Upon written request of a duly authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, CA 
shall submit written reports, under oath if requested, relating to any 
of the matters contained in this Final Judgment as may be requested.
    (C) No information or documents obtained by the means provided in 
this section shall be divulged by the Plaintiff to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment or as otherwise 
required by law.
    (D) If, at the time information or documents are furnished by CA to 
Plaintiff, CA represents and identifies in writing the material in any 
such information or documented to which a claim of protection may be 
asserted under Rule 26(c)(7) of the Federal Rules of Civil Procedure, 
and CA marks each pertinent page of such material, Subject to claim of 
protection under Rule 26(c)(7) of the Federal Rules of Procedure,'' 
then the United States shall give ten (10) calendar days' notice prior 
to divulging such material in any legal proceeding (other than a grand 
jury proceeding) to which CA is not a party.

VIII. Civil Penalty

    Judgment is hereby entered in this matter in favor of Plaintiff, 
United States of America, and against Defendants, CA and Platinum, and, 
pursuant to Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1), 
the Debt Collection Improvement Act of 1996, Pub. L. 104-134, Sec. 
31001(s) (amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990, 28 U.S.C. 2461), and Federal Trade Commission Rule 1.98, 16 
CFR 1.98.61 FR 54549 (Oct. 21, 1996), Defendants are hereby ordered 
jointly and severally to pay a civil penalty in the amount of six 
hundred and thirty eight thousand United States dollars (US $638,000). 
Payment shall be made by wire transfer of funds to the United States 
Treasury through the Treasury Financial Communications System or by 
cashier's check made payable to the Treasury of the United States and 
delivered to Chief, FOIA Unit, Antitrust Division, Department of 
Justice, Liberty Place, 325 7th Street, NW., Suite 200, Washington, DC 
20530. Defendants shall pay the full amount of the civil penalties 
within thirty (30) days of the entry of this Final Judgment.
    In the event of a default in payment, interest at the rate of 
eighteen (18) percent per annum shall accrue thereon from the date of 
the default to the date of payment. The portion of the Final Judgment 
requiring the payment of civil penalties for violation of section 7A of 
the Clayton Act is not subject to the Antitrust Procedures and 
Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h)).

IX. Retention of Jurisdiction

    This court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for such further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify or terminate any of its provisions, to 
enforce compliance, and to punish any violations of its provisions.

X. Expiration of Final Judgment

    Unless extended by this Court, this Final Judgment shall expire ten 
years from the date of its entry.

XI. Costs

    Each party shall bear its own costs of this action.

XII. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

 Dated:----------------------------------------------------------------

Court approval subject to the Antitrust Procedures and Penalties 
Act, 15 United States 16.
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United States District Judge

Parties Entitled to Notice of Entry of Order

Counsel for the United States

Renata B. Hesse, Esq.,
James J. Tierney, Esq.,
U.S. Department of Justice, Antitrust Division, Networks and 
Technology Section, 600 E Street, NW., Suite 9500, Washington, DC 
20530, Tel: 202/307-0797, Fax: 202/616-8544.

Counsel for Computer Associates International, Inc. and Platinum 
technology International, inc.

Richard L. Rosen, Esq.,
Arnold & Porter, 555 Twelfth Street, NW., Washington, DC 20004-1206, 
Tel: 202/942-5499, Fax: 202/942-5999.

United States District Court for the District of Columbia

[Civil No. 01-02062 (GK)]

United States of America, Plaintiff, v. Computer Associates 
International, Inc.; and Platinum Technology International, inc., 
Defendants

Competitive Impact Statement

    The United States, pursuant to the Antitrust Procedures and 
Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files this Competitive 
Impact Statement to set forth the information necessary to enable the 
Court and the public to evaluate the proposed Final Judgment that would 
resolve the allegations in the civil antitrust suit filed by the United 
States on September 28, 2001.

I. Nature and Purpose of This Proceeding

    The United States filed a two-count Complaint against Computer 
Associates International, Inc. (``CA'') and Platinum technology 
International, inc. (``Platinum'') related to the Defendants' conduct 
surrounding CA's $3.5 billion acquisition of Platinum. Count One 
alleges that the Defendants entered into an agreement that illegally 
restrained trade in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1. Prior to their merger, CA and Platinum aggressively competed 
in numerous software markets. The Complaint alleges that, under the 
Merger Agreement, Platinum could not, without CA's prior written 
approval, offer customers discounts greater than 20% off list prices. 
During the time between the signing of the Merger Agreement and the 
closing of the merger (the ``pre-consummation period''), Platinum's 
sales representatives were required to submit pre-approval forms to CA 
which contained competitively sensitive information about Platinum's 
customers and its prospective bids for new business. The pre-approval 
forms were sent to a CA Divisional Vice President located at Platinum's 
Illinois headquarters where he exercised the authority to approve or 
reject proposed Platinum customer contracts seeking discounts greater 
than 20% off list prices. The agreement to limit discounts and the 
Defendants' actions to effectuate their agreement chilled Platinum's 
ability to compete against CA and had the effect of denying Platinum's 
and

[[Page 41476]]

CA's customers the benefits of free and open competition. The Complaint 
asks the Court to declare the agreement to be unlawful and seeks an 
injunction to prevent CA from entering into similar agreements in the 
future.
    In Count Two, the United States alleges that the Defendants 
violated Title II of the Hart-Scott-Rodino Antitrust Improvement Act of 
1976 (``HSR Act''), 15 U.S.C. 18a, which requires merging parties in 
certain instances to file pre-acquisition Notification and Report Forms 
with the Department of Justice (``DOJ'') and Federal Trade Commission 
(``FTC'') and observe a mandatory waiting period before acquiring any 
voting securities or assets of to the to-be-acquired person. The 
fundamental purpose of the HSR waiting period is to prevent the merging 
parties from combining during the pendency of an antitrust review, 
thereby ensuring that they remain separate and independent actors. The 
Defendants' Merger Agreement and pre-consummation conduct altered their 
status as separate and independent economic actors by transferring to 
CA control of substantial aspects of Platinum's business. In addition 
to discounts, CA exercised approval authority over other terms and 
conditions of Platinum's customer contracts and over Platinum's ability 
to offer consulting services at a fixed price and year 2000 (``Y2K'') 
remediation consulting services. Further exercising its control over 
Platinum during the pre-consummation period, CA obtained competitively 
sensitive bid information and made decisions about Platinum's 
recognition of revenue and participation at industry trade shows. The 
Complaint seeks a civil penalty for violation of the HSR Act.
    After this suit was filed, the United States and Defendants reached 
a proposed settlement that eliminates the need for a trial in this 
case. The proposed Final Judgment remedies the Section 1 violation by 
prohibiting CA in future acquisitions from agreeing on prices, 
approving customer contracts, and misusing competitively sensitive bid 
information. CA and Platinum would also agree to pay a $638,000 civil 
penalty to resolve the HSR Act violation.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA, unless 
the United States first withdraws its consent. Entry of the proposed 
Final Judgment would terminate this action, except that this Court 
would retain jurisdiction to construe, modify or enforce the provisions 
of the proposed Final Judgment and to punish violations thereof. Entry 
of judgment would not constitute evidence against, or an admission by, 
any party with respect to any issue of fact or law involved in the case 
and is conditioned upon the Court's finding that entry is in the public 
interest.

II. Description of the Events Giving Rise to the Alleged Violation of 
the Antitrust Laws

A. Background

1. The Defendants and the Merger Investigation
    CA is a Delaware corporation with its principal place of business 
in Islandia, New York. CA develops, markets, and supports software 
products for a variety of computers and operating systems, including 
systems management software for computers that use IBM's OS/390, VSE 
and VM operating systems (``mainframe computers''). Systems management 
software products are used to help manage, control, or enhance the 
performance of mainframe computers. CA, in its 1998 fiscal year, 
reported revenues in excess of $4.7 billion.
    Platinum was a Delaware corporation with its principal place of 
business in Oakbrook Terrace, Illinois. Platinum, like CA, was a 
leading vendor of mainframe systems management software products. In 
addition to its software business, Platinum offered computer consulting 
services, including Y2K remediation services. In its fiscal year 1998, 
Platinum reported revenues of about $968 million.
    Prior to March 1999, Platinum aggressively competed with CA in the 
development and sale of numerous software products, including mainframe 
systems management software products. On March 29, 1999, CA and 
Platinum announced the Merger Agreement, pursuant to which CA would 
purchase all issued and outstanding shares of Platinum through a $3.5 
billion cash tender offer. Thereafter, CA and Platinum filed the pre-
acquisition Notification and Report Forms required by the HSR Act.
    After reviewing the parties' HSR filings, DOJ opened an 
investigation that led to the filing of a Complaint on May 25, 1999, 
alleging that CA's proposed acquisition of Platinum would eliminate 
substantial competition and result in higher prices in certain 
mainframe systems management software markets. See United States versus 
Computer Associates International Inc., et al. (D.D.C. 99-01318 (GK)). 
Simultaneously with the filing of the Complaint, the parties reached an 
agreement that allowed CA and Platinum to go forward with the merger, 
provided that CA sell certain Platinum mainframe systems management 
software products and related assets. The HSR waiting period expired on 
May 25, 1999. Three days later, CA announced that it had accepted for 
payment all validly tendered Platinum shares and the Defendants 
thereafter consummated the merger. Platinum survived the merger and is 
now a wholly-owned subsidiary of CA.
2. CA and Platinum Agreed That CA Would Approve Certain Platinum 
Customer Contracts
    Section 5.1 of CA's Merger Agreement with Platinum, titled 
``Conduct of Business,'' sets forth numerous covenants made by Platinum 
as part of the agreement to be acquired regarding how it would conduct 
its business during the pre-consummation period. One provision, 
commonly found in merger agreements, required Platinum to carry on its 
business ``in the ordinary course in substantially the same manner as 
heretofore conducted.'' The Merger Agreement, however, also contained 
provisions not normally found in merger agreements that severely 
restricted Platinum's ability to engage in business as a competitive 
entity independent of CA's control. Section 5.1(j) prohibited Platinum, 
without the prior written approval of CA, from:

enter[ing] into any agreement pursuant to which [Platinum] will 
provide services for a term of more than 30 days at a fixed or 
capped price; . . . enter[ing] into any customer sale or license 
agreement with non-standards terms or at discounts from list prices 
in excess of 20%; . . . [and] enter[ing] into or amend[ing] any 
contract to provide for ``year 2000'' remediation services.

    CA retained the right to be the ``sole arbiter'' of whether to 
grant exceptions to these conduct of business restrictions. In its May 
14, 1999, SEC 10-Q filing, Platinum conceded that the Merger Agreement 
placed Platinum substantially under CA's operational control, stating:

    Also, the merger agreement imposes extremely tight restrictions 
on [Platinum's] ability to take various actions and to conduct its 
business without Computer Associates' consent. These restrictions 
could have a severe detrimental effect on [Platinum's] business.

    Platinum 10-Q (5/14/99). CA further entered into consulting and 
non-compete agreements with Platinum's Chief Executive Officer, Chief 
Financial Officer, and Chief Operating Officer that included provisions 
providing that each may be held personally liable if Platinum failed to 
comply with the

[[Page 41477]]

competitive restrictions of Section 5.1(j) of the Merger Agreement.
    Platinum changed its ordinary customer contract approval procedures 
to ensure that the company operated in accordance with the limitation 
imposed by Section 5.1(j) of the Merger Agreement and that any 
exceptions were approved by CA. Under the new procedures, Platinum 
sales representatives were required to complete contract pre-approval 
forms. The forms identified the customer, the products or services 
offered, list price, discount, and a justification for the discount. 
Platinum sales representatives were required to attach supporting 
documents such as the proposed contract or statement of work. The forms 
also contained a section for CA to note its approval.
    For proposed contracts that did not conform to the business 
restrictions imposed by Section 5.1(j) of the Merger Agreement (for 
example, a contract proposing a discount greater than 20%), the 
Platinum sales representatives were required to submit the pre-approval 
forms and supporting documents to a contract review and approval team 
located at Platinum's Illinois headquarters. The team was composed of 
two Platinum employees and a CA Division Vice President. The CA Vice 
President had final authority to approve or reject the contract or 
request additional information from the Platinum sales force. On 
several occasions, the CA Vice President consulted with other CA 
executives before approving or rejecting a proposed contract. CA 
exercised control over Platinum's customer contract process through 
this approval authority. Platinum maintained a database to track 
contracts in the pre-approval process which contained competitively 
sensitive information relating to customer-specific proposals and noted 
whether CA had approved or rejected the contract. CA had access to this 
database.
3. CA Exercised Operational Control Over Platinum's Ability to Price 
Its Products and Services and Set Other Terms and Conditions of Sale
    CA, during the HSR waiting period, took operational control over 
Platinum's ability to price its products and services, set other terms 
and conditions of sale, enter into fixed-price contracts over 30 days, 
and offer Y2K remediation services.
    Discounts: Before the merger announcement, Platinum routinely gave 
software discounts over 20%, and discounts up to 80% were not uncommon. 
Platinum also commonly discounted consulting services more than 20%. 
After implementation of the new discounting restrictions and contract 
approval procedures, some Platinum sales representatives modified their 
normal discounting practices and kept discounts below the levels on 
which CA and Platinum had agreed, including bids where the sales 
representative would have otherwise recommended, and Platinum would 
likely have approved, discounts above the agreed-upon levels. Other 
Platinum sales representatives submitted, under the newly established 
process, proposed contracts seeking discounts greater than 20%. 
However, these requests were subject to review and approval by CA. In 
some cases, where CA found the justification given to support an 
exception was insufficient, CA requested further explanation or 
required the offer to be modified before granting approval.
    Other Contract Terms: Prior to the merger announcement, Platinum 
often deviated from the terms in its standard contract and accepted 
non-standard terms, such as terms proposed by customers. Under the 
Merger Agreement, Platinum was prohibited from offering non-standard 
terms without CA approval. After the merger announcement, CA approved 
some contracts containing non-standard terms and returned others to the 
sales representative for revision before granting approval.
    Fixed-Price Contracts: Prior to the merger announcement, Platinum 
offered to provide consulting services for more than 30 days for a 
fixed price where Platinum performed a particular task for the stated 
price and assumed the risk of any cost overruns. The Merger Agreement 
prohibited Platinum from entering into consulting services contracts 
with fixed prices of more than 30 days in length. Although the Merger 
Agreement allowed fixed-price contracts shorter than 30 days, Platinum 
sales representatives were notified that no fixed-price contracts could 
be presented to customers without CA approval. Subsequently, all 
computer consulting service contracts, including fixed-price contracts, 
were submitted to CA for approval. CA approved many, but not all, 
computer consulting contracts that were submitted for its review.
    Y2K Remediation Services: The Merger Agreement prevented Platinum 
from offering Y2K services without CA's prior written approval. Almost 
all new Y2K remediation activities ceased after the merger 
announcement. CA, however, reviewed all Y2K remediation proposals 
pending at the time of the merger announcement and a handful of 
proposals submitted after March 29. CA approved some Y2K remediation 
contracts and rejected others.
4. Other Indicia CA Exercised Operational Control Over Platinum's 
Business
    Finally, CA, during the pre-consummation period, had sufficient 
control over Platinum's operations that it was able to change 
Platinum's method of booking revenues and reversed revenues previously 
recognized for customer contracts. CA even exercised approval authority 
over Platinum's participation at industry trade shows by canceling 
Platinum's participation at a trade show where Platinum would have 
presented its products and sought future business.

B. The Defendants' Agreement To Limit Platinum's Discounts Violated 
Section 1 of the Sherman Act

    The Complaint alleges that the Merger Agreement and the Defendants' 
pre-consummation conduct had the effect of lessening or eliminating 
competition between CA and Platinum in the sale of certain software 
products in violation of Section 1 of the Sherman Act. Section 1 of the 
Sherman Act prohibits any ``contract, combination or conspiracy'' that 
is ``in restraint of trade.'' The pendency of a proposed merger does 
not excuse the merging parties of their obligations to compete 
independently. Thus, pending consummation, activities by one party to 
control or affect decisions of another with regard to price, output or 
other competitively significant matter may violate Section 1.
    At the time of the tender offer, CA and Platinum were substantial 
competitors in numerous software markets. Under the Merger Agreement, 
CA and Platinum agreed that Platinum would not offer discounts greater 
than 20% off list prices for its software products unless CA approved 
the discount. In furtherance of this agreement, CA installed one of its 
Vice Presidents at Platinum's headquarters to review Platinum's 
proposed customer contracts and exercise authority to approve or reject 
proposed contracts offering discounts greater than 20%. CA also 
obtained prospective, customer-specific information regarding 
Platinum's bids, including the name of the customer, products and 
services offered, list price, discount, and the justification for any 
discount. Platinum placed no limits with respect to CA's use of this 
information. CA used this information to monitor Platinum's adherence 
to the Merger Agreement's limitation on discounts and to exercise its 
authority to approve or reject any proposed contract that offered 
discounts over 20%. The

[[Page 41478]]

Defendants' conduct had the effect of lessening or eliminating 
competition between them in the sale of various software products.
    The Defendants' agreement to limit Platinum's right to 
independently set the price for its software products and their actions 
to effectuate this agreement were extraordinary and not reasonably 
ancillary to any legitimate goal of the transaction.

C. CA's Exercise of Operational Control Over Platinum Violated the HSR 
Act

    The Complaint asserts that the Defendants' pre-consummation conduct 
also violated the HSR Act. The United States does not believe that the 
payment of civil penalties under the HSR Act is subject to the 
Administrative Procedures and Penalties Act (``APPA''). Consequently, 
the civil penalties component of the proposed Final Judgment is not 
open to public comment.\1\ Although the civil penalty component of the 
Final Judgment is not open to public comment, it is appropriate in this 
case to use the Competitive Impact Statement to explain our views 
regarding CA's and Platinum's violation of the HSR Act.
---------------------------------------------------------------------------

    \1\ Obtaining civil penalties in a consent judgment is not the 
type of ``consent judgment'' Congress, had in mind when it passed 
the APPA. Thus, in consent settlements seeking both equitable relief 
and civil penalties, courts have not required use of APPA procedures 
with respect to the civil penalty component of the proposed final 
judgment. See United States v. ARA Services, Inc., 1979-2 Trade Cas. 
(CCH) [para] 62,861 (E.D. Mo.). Moreover, courts in this district 
have consistently entered consent judgments for civil penalties 
under the HSR Act without employing APPA procedures. See e.g., 
United States v. Hearst Trust, et al., 2001-2 Trade Cases [para] 
73,451 (D.D.C.); United States v. Input/Output et al., 1999-1 Trade 
Cas. (CCH) [para] 24,585 (D.D.C.); United States v. Blackstone 
Capital Partners II Merchant Banking Fund, et al., 1999-1 Trade Cas. 
(CCH) [para] 72,484 (D.D.C.); United States v. The Loewen Group, 
Inc., 1998-1 Trade Cas. (CCH) [para] 72,151 (D.D.C.); United States 
v. Mahle GMBH, et al., 1997-2 Trade Cas. (CCH) [para] 71,868 
(D.D.C.); United States v. Figgie Int'l, Inc., 1997-1 Trade Cas. 
(CCH) [para] 71,766 (D.D.C.); United States v. Foodmaker, Inc., 
1996-2 Trade Cas. (CCH) [para] 71,555 (D.D.C.); United States v. 
Titan Wheel International, Inc., 1996-1 Trade Cas. (CCH) [para] 
71,406 (D.D.C.); United States v. Automatic Data Processing, Inc., 
1996-1 Trade Cas. (CCH) [para] 71,361 (D.D.C.); United States v. 
Trump, 1988-1 Trade Cas. (CCH) [para] 67,968 (D.D.C.).
---------------------------------------------------------------------------

1. The Purpose of the HSR Act
    Prior to enactment of the HSR Act, the DOJ and FTC often 
investigated anticompetitive ``midnight mergers'' that had been 
consummated with no public notice. The merged entity thereafter had the 
incentive to delay litigation so that substantial time elapsed before 
adjudication and attempted relief. During this extended time, consumers 
were harmed by the reduction in competition between the acquiring and 
acquired firms and, if after adjudication, the court found that the 
merger was illegal, effective relief was difficult to achieve. The HSR 
Act was designed to strengthen antitrust enforcement by preventing the 
consummation of large mergers before they were investigated by the 
enforcement agencies. In particular, the HSR Act prohibits certain 
acquiring parties from consummating a merger before a prescribed 
waiting period expires.\2\ The HSR waiting period remedies the problem 
of ``midnight mergers'' by keeping the parties separate, thereby 
preserving their status as independent economic actors during the 
antitrust investigation. The legislative history of the HSR Act makes 
this plain. Congress was concerned that competition existing before the 
merger should be maintained to the extent possible pending review by 
the antitrust enforcement agencies and the court. Consistent with this 
purpose, an acquiring person may not, after signing a merger agreement, 
exercise operational or management control of the to-be-acquired 
person's business.\3\
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    \2\ The HSR Act requires that ``no person shall acquire, 
directly or indirectly, any voting securities or assets of any other 
person'' until both have made premerger notification filings and the 
post-filing waiting period has expired. 15 U.S.C. 18a(a). The post-
notification waiting period following a tender offer, as in this 
proceeding, is 15 days from the filing of the premerger notification 
and then 10 additional days after the parties comply with the 
enforcement agency's request for additional information, if any. 15 
U.S.C. 18a(b)(1), (e). The enforcement agency may grant early 
termination of the waiting period. 15 U.S.C. 18a(b)(2), and often 
does when the merger poses no competitive problems.
    \3\ The HSR Regulations also support the United States' position 
that the exercise of operational control triggers a violation of the 
HSR Act's prohibition of consummating an acquisition during the 
waiting period. The Regulations define an ``acquiring person'' as 
one who will ``hold'' voting securities directly or indirectly or 
through third parties. 16 CFR 801.2(a). ``Hold'' was defined as 
meaning ``beneficial ownership,'' 16 CFR 801.1(c), but beneficial 
ownership itself was not defined. In its ``Statement of Basis and 
Purpose'' (``SBP''), 43 FR 33450 (July 31, 1978), which accompanied 
the regulations, the FTC stated that, although ``beneficial 
ownership'' was not defined, its existence is to be determined ``in 
the context of particular cases'' with respect to the person 
enjoying the indicia of beneficial ownership. Id. at 33459. 
Consistent with the purpose of the SBP, the transfer of operational 
or management control is a significant attribute of beneficial 
ownership that may support the conclusion that the to-be-acquired 
firm has effectively exited the business prior to the HSR review 
being completed. See United States v. Input/Output, et al., 1999-1 
Trade Cas. (CCH) [para] 24,585 (D.D.C.); United States v. Titan 
Wheel International, Inc., 1996-1 Trade Cas. (CCH) [para] 71,406 
(D.D.C.).
---------------------------------------------------------------------------

2. The Merger Agreement and Defendants' Pre-Consummation Actions 
Violated the HSR Act by Altering Their Status as Separate Economic 
Actors
    Merger agreements typically contain ``interim covenants'' limiting 
the to-be-acquired person's operations during the pre-consummation 
period. The Merger Agreement between CA and Platinum contained a 
covenant typically found in most merger agreements that Platinum would 
continue to operate its business in the ordinary course of business. 
Such ``ordinary course'' provisions do not violate the HSR Act.
    The Merger Agreement also contained many other customary covenants, 
including Platinum's agreement that it would not, without the prior 
written approval of CA: (1) Declare or pay dividends or distributions 
of its stock; (2) issue, sell, pledge, or encumber its securities; (3) 
amend its organizational documents; (4) acquire or agree to acquire 
other businesses; (5) mortgage or encumber its intellectual property or 
other material assets outside the ordinary course; (6) make or agree to 
make large new capital expenditures; (7) make material tax elections or 
compromise material tax liabilities; (8) pay, discharge or satisfy any 
claims or liabilities outside the ordinary course; and (9) commence 
lawsuits other than routine collection of bills. The purpose of these 
standard provisions is to prevent a to-be-acquired person from taking 
actions that could seriously impair the value of what the acquiring 
firm had agreed to buy. While these customary provisions limited 
Platinum's ability to make certain business decisions without CA's 
consent, they were also reasonable and necessary to protect the value 
of the transaction and did not constitute the HSR Act violation.
    The Merger Agreement, however, did not stop with these customary 
covenants, but went further to impose extraordinary conduct of business 
limitations enabling CA to exercise operational control over 
significant aspects of Platinum's business. These restrictions and CA's 
exercise of operational control went far beyond ordinary and reasonable 
pre-consummation covenants and constituted a violation of the HSR Act. 
In the pre-merger context, an acquiring person may not exercise 
operational control of the to-be-acquired person's business. This is 
what CA did in this case.
    Platinum, immediately upon executing the Merger Agreement, 
transferred to CA operational control of substantial aspects of its 
business,

[[Page 41479]]

including the right to set prices and other terms of customer 
contracts, enter into certain consulting services contracts, account 
for revenues, and participate at trade shows. To ensure compliance with 
the Merger Agreement's business restrictions, Platinum's CEO, COO, and 
CFO were personally liable if the restrictions were not observed. 
Moreover, a CA Divisional Vice President occupied an office at 
Platinum's Illinois headquarters where he reviewed proposed Platinum 
customer contracts and exercised authority to approve or reject 
contracts. In effect, the decision-making authority with respect to 
these business activities resided with CA's management, not Platinum's. 
Further exercising its operational control, CA obtained Platinum's 
competitively sensitive customer information without any restriction as 
to its use by CA or its dissemination within CA. This conduct 
demonstrates that CA and Platinum did not adhere to the requirement of 
the HSR Act that they remain separate and independent economic entities 
during the waiting period.
    Both CA and Platinum were in violation of the HSR Act from March 
29, 1999, the date on which the Merger Agreement was executed, through 
May 25, 1999, the day on which CA, Platinum, and DOJ agreed to a 
consent decree resolving DOJ's antitrust concerns.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment contains two forms of relief: (1) 
Injunctive provisions intended to prevent recurrence of the violation 
of Section 1 of the Sherman Act alleged in the Complaint; and (2) a 
monetary civil penalty from CA and Platinum for the violation of the 
HSR Act.

A. Sherman Act Relief

    The proposed Final Judgment sets forth the conduct that CA is 
prohibited from engaging in, certain conduct that CA may engage in 
without violating the Final Judgment, a compliance program CA must 
follow, and procedures available to the United States to determine and 
ensure compliance with the Final Judgment. Section X provides that 
these provisions will expire ten years after entry of the Final 
Judgment.
1. Prohibited Conduct
    Section IV of the proposed Final Judgment sets forth the 
substantive injunctive provisions and is designed to prevent the 
recurrence of the alleged Sherman Act Section 1 violation. Thus, 
Section IV(A) prohibits CA and a merger partner from agreeing to 
establish the price of any product or services offered in the United 
States to any customer during the preconsummation period. The proposed 
Final Judgment also would prevent the repetition of the conduct CA 
employed to facilitate its agreement with Platinum to establish prices. 
Specifically, Section IV(B) prohibits CA from entering into an 
agreement to review, approve or reject customer contracts during the 
pre-consummation period, and Section IV(C) prohibits CA from entering 
into an agreement that requires a party to provide bid information to 
another party.
2. Permitted Conduct
    Section V of the proposed Final Judgment identifies certain 
agreements and conduct that are not prohibited by the Judgment. 
Sections V(A), and (B) and (C) authorize the use of certain ``interim 
covenants'' that are either typically found in merger agreements or are 
not likely to restrict competition. Section V(A) permits the use of a 
provision that requires the to-be-acquired person to operate its 
business in the ordinary course consistent with past practices. Section 
V(B) permits the use of material adverse change provisions which give 
the acquiring person certain rights in the event there is a material 
adverse change in the to-be-acquired person's business. These are 
customary provisions found in most merger agreements and are intended 
to protect the value of the transaction and prevent the to-be-acquired 
person from wasting assets. Under Section V(C), CA would be able to 
prevent a to-be-acquired person from offering customers during the pre-
consummation period enhanced rights or refunds of any nature upon a 
change of control of the to-be-acquired firm. For example, CA could 
prohibit a to-be-acquired person from offering a full refund of all 
license and maintenance fees if CA consummates the merger. The use of 
such a provision is not likely to restrict competition.
    Section V(D) recognizes a narrow exception to the prohibition in 
Section IV(C) concerning CA's access to customs bid information. As a 
general rule, in a merger between competitors one merging party should 
not obtain another party's prospective, customer-specific bid 
information prior to consummation of the transaction. Access to such 
information raises significant antitrust risks because it could be used 
to reduce competition during the pre-consummation period or after if 
the transaction is subsequently abandoned or blocked. There may be 
situations, however, where a merging party has a legitimate business 
need for certain bid information prior to closing. For example, during 
the due diligence process a party may need information regarding 
pending contracts in the pipeline to properly value the business or to 
assess the future growth of the business. To reduce antitrust exposure 
where bid information is necessary for due diligence purposes, merging 
parties generally consult with counsel about the specifics of their 
particular situation and adopt a variety of safeguards. Such safeguards 
may include employing an independent agent to collect the information 
and present the information in an aggregated or other form that shields 
customer-specific and other competitively sensitive information. In 
addition, a non-disclosure agreement is often use to limit use of any 
bid information for due diligence purposes. In some cases, merging 
parties opt not to receive bid information, and instead use other 
mechanisms to adjust the value after closing.
    Under Section V(D), CA may obtain pending bid information of the 
other party for due diligence purposes only to the extent that the bids 
are material to the understanding of the future earnings and prospects 
of the other party and only pursuant to an appropriate non-disclosure 
agreement. This non-disclosure agreement must ensure that CA employees 
who receive material bid information do not use the information to harm 
competition. Material bid information may only be provided to CA 
employees who have a legitimate need for the information, such as 
employees with due diligence responsibilities or who are responsible 
for negotiating the transaction. In addition, material bid information 
may not be provided to CA employees who are directly involved in the 
marketing, pricing or sale of competing products. Thus, the information 
may not be provided directly or indirectly to any CA employee involved 
in day-to-day sales or marketing activities or otherwise use in the 
sales process. With respect to non-material bids, CA may not obtain 
such information except where necessary for due diligence purposes and 
where the information is collected by an independent agent, subject to 
appropriate use and confidentiality limitations.
    This limited access to bid information is consistent with the 
relief sought in the Complaint. The Complaint alleged that CA collected 
and use Platinum's bid information in furtherance of its agreement to 
limit Platinum's discounts. The Complaint did not address the situation 
where CA had a legitimate need for material bid information and

[[Page 41480]]

where such information was provided subject to appropriate limitations 
and confidentiality protections.
    Finally, Sections V(E) and (F) clarify that the proposed Final 
Judgment does not prohibit CA from entering into certain price 
agreements or engaging in certain joint activities that would have been 
lawful independent of the proposed merger. Section V(D) permits price 
agreements in the context of an otherwise lawful joint bid situation, 
and Section V(E) permits price agreements in an otherwise lawful 
distribution relationship.
3. Compliance
    Sections VI and VII of the proposed Final Judgment set forth 
various compliance procedures. Section VI sets up an affirmative 
compliance program directed toward ensuring CA's compliance with the 
limitations imposed by the proposed Final Judgment. The compliance 
program includes the designation of a compliance officer who is 
required to distribute a copy of the Final Judgment to each present and 
succeeding director, officer, employee and agent with responsibility 
for mergers and acquisitions, brief each such person regarding 
compliance with the Final Judgment, and obtain certifications from each 
such person that they have received a copy of the Final Judgment and 
understanding their obligations under the Judgment. In addition, the 
compliance officer must provide a copy of the Final Judgment to a 
potential merger partner before the initial exchange of a letter of 
intent, definitive agreement or other agreement of merger. Section VI 
of the proposed Final Judgment further requires the compliance officer 
to certify to the United States that it is in compliance and report any 
violations of the Final Judgment.
    To facilitate monitoring CA's compliance with the Final Judgment, 
Section VII grants DOJ access, upon reasonable notice, to CA's records 
and documents relating to matters contained in the Final Judgment. CA 
must also make its personnel available for interviews or depositions 
regarding such matters. In addition, upon request, CA must prepare 
written reports relating to matters contained in the Final Judgment.
    These provisions are fully adequate to prevent recurrence of the 
type of illegal conduct alleged in the Complaint. The proposed Final 
Judgment should ensure that CA in future mergers or acquisitions will 
not enter into agreements to limit price competition during the 
preconsummation period. Consequently, customers will receive the 
benefits of free and open competition.

B. Civil Penalties

    Under section (g)(1) of the HSR Act, 15 U.S.C. 18a(g)(1), any 
person who fails to comply with the Act shall be liable to the United 
States for a civil penalty of not more than $11,000 for each day during 
which such person is in violation of the Act.\4\ As the Stipulation and 
proposed Final Judgment indicate, Defendants have agreed to pay civil 
penalties totaling $638,000 within 30 days of entry of the Final 
Judgment. While the United States was prepared to seek civil penalties 
totaling $1,267,000 at trial, the uncertainties inherent in any 
litigation led to acceptance of $638,000 as an appropriate civil 
penalty for settlement purposes. Moreover, this civil penalty should be 
sufficient to deter CA and other acquiring persons from exercising 
operational control over a to-be-acquired person during the HSR waiting 
period.
---------------------------------------------------------------------------

    \4\ The maximum daily civil penalty, which had been $10,000, was 
increased to $11,000 for violations occurring on or after November 
20, 1996, pursuant to the Debt Collection Improvement Act of 1996, 
Pub. L. 104-134 Sec. 31001(s) and Federal Trade Commission Rule 
1.98, 16 CFR 1.98.61 FR 54548 (Oct. 21, 1996).
---------------------------------------------------------------------------

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal district court to recover 
three times the damages the person has suffered, as well as the costs 
of bringing a lawsuit and reasonable attorneys fees. Entry of the 
proposed Final Judgment will neither impair nor assist the bringing of 
any private antitrust damage action. Under the provisions of section 
5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment 
has no effect as prima facie evidence in any subsequent private lawsuit 
that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by this Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry of the decree upon 
this Court's determination that the injunction portion of the proposed 
Final Judgment is in the public interest.
    The APPA provides a period of a least sixty (60) days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Sherman Act injunction contained in the Final Judgment. Any person who 
wishes to comment should do so within sixty (60) days of the date of 
publication of this Competitive Impact Statement in the Federal 
Register. The United States will evaluate and respond to the comments. 
All comments will be given due consideration by DOJ, which remains free 
to withdraw its consent to the proposed Final Judgment at any time 
prior to entry. The comments and the response of the United States will 
be filed with this Court and published in the Federal Register. Written 
comments should be submitted to:

Renata B. Hesse, Chief, Networks and Technology Section, United States 
Department of Justice, Antitrust Division, 600 E. Street, NW., Suite 
9500, Washington, DC 20530.

    The proposed Final Judgment provides that this Court retains 
jurisdiction over this action, and the parties may apply to this Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States is satisfied, however, that a trial would not result in 
further injunctive relief than is contained in the proposed Final 
Judgment. Moreover, the proposed injunctive relief and payment of civil 
penalties are sufficient to achieve the primary objective of the 
litigation--deterring CA and any potential merger partner from entering 
into agreements on price and from failing to comply with the waiting 
period requirements of the HSR Act.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The APPA requires that injunctions of anticompetitive conduct 
contained in proposed consent judgments in antitrust cases brought by 
United States be subject to a sixty (60) day comment period, after 
which the court shall determine whether entry of the proposed Final 
Judgment is ``in the public interest.'' In making that determination, 
the court may consider--


[[Page 41481]]


    (1) 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;
    (2) the impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the 
District of Columbia has held, the APPA permits a court to consider, 
among other things, the relationship between the remedy secured and the 
specific allegations set forth in the Government's Complaint, whether 
the decree is sufficiently clear, whether enforcement mechanisms are 
sufficient, and whether the decree may positively harm third parties. 
See United States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 
1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \5\ Rather,
---------------------------------------------------------------------------

    \5\ 119 Cong. Rec. 24,598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
those procedures are discretionary (15 U.S.C. 16(f)). A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceeding would aid the 
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd 
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 
6538.

absent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should . 
. . carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.\6\
---------------------------------------------------------------------------

    \6\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade 
Cas. (CCH) [para] 61,508, at 71,980 (W.D. Mo. 1977); see also United 
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992); United 
States v. Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 870 
(S.D.N.Y. 1987).

    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462-63 (9th Cir. 1988), quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
---------------------------------------------------------------------------
(1981); see also Microsoft, 56 F.3d at 1458. Precedent requires that

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\7\
---------------------------------------------------------------------------

    \7\ United States v. Bechtel Corp., 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc., 858 F. 2d 
at 463; United States v. National Broadcasting Co., 449 F. Supp. 
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F. 
Supp. at 716. See also United States v. American Cyanamid Co., 719 
F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984).

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. A ``proposed decree must 
be approved even if it falls short of the remedy the court would impose 
on it own, as long as it falls within the range of acceptability or is 
`within the reaches of public interest.' '' \8\
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    \8\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 
151 (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at 716), aff'd sub 
nom. Maryland v. United States, 460 U.S. 1001 (1983); United States 
v. Alcan Aluminum, Ltd, 605 F. Supp. 619, 622 (W.D. Ky. 1985); 
United States v. Carrols Dev. Corp., 454 F. Supp. 1215, 1222 
(N.D.N.Y. 1978).
---------------------------------------------------------------------------

    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States 
alleges in its Complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Since the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecutorial discretion by bringing a case in the first 
place,'' it follows that the Court ``is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States might have but did 
not pursue. Id.

III. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: April 23, 2002.
      Respectfully submitted,
Renata B. Hesse, N. Scott Sacks, James J. Tierney (D.C. 
Bar434610), Jessica N. Butler-Arkow, David E. Blake-Thomas, 
Larissa Ng Tan,

Attorneys, U.S. Department of Justice, Antitrust Division, Networks 
and Technology Section, 600 E Street, NW., Suite 9500, Washington, 
DC 20530, 202/307-0797.

Certificate of Service

    I hereby certify that a copy of the foregoing Competitive Impact 
Statement was hand delivered this 23rd day of April 2002, to: Counsel 
for Computer Associates International, Inc. and Platinum technology 
International, inc.

Richard L. Rosen, Esquire, Arnold & Porter, 555 Twelfth Street, NW., 
Washington, DC 20004-1206, Fax: 202/547-5999.

James L. Tierney.
  
[FR Doc. 02-15328 Filed 6-17-02; 8:45 am]
BILLING CODE 4410-11-M