United States v. International Business Machines Corporation; Proposed Final Judgment Termination

DEPARTMENT OF JUSTICE

Antitrust Division

[Civil Action No. 72-344 (AGS)]

United States v. International Business Machines Corporation;

Proposed Final Judgment Termination

Take Notice that International Business Machines Corporation

(``IBM''), defendant in this antitrust action, has filed a motion for

an order terminating the final judgment entered by the United States

District Court for the Southern District of New York on January 25,

1956 (the ``Final Judgment''). The United States of America, plaintiff,

has tentatively consented to IBM's motion in certain respects, but has

reserved the right to withdraw its consent for at least 90 days after

publication of this Notice. The Complaint, Final Judgment and proposed

termination are further described below.

This Notice relates solely to those aspects of the Final Judgment

to which the United States has tentatively consented to termination. A

further notice will be published before any action on IBM's termination

motion as it applies to the remainder of the Final Judgment. Prior to

entry of an order terminating any aspect of the Final Judgment, the

Court and the parties will consider public comments. Any such comments

on the proposed terminations described in this Notice must be filed

within 60 days.

The Final Judgment was entered by consent between IBM and the

United States, settling an action filed on January 21, 1952. The

Complaint in that action alleged that IBM had monopolized, attempted to

monopolize and restrained trade in the tabulating industry, in

violation of Sections 1 and

[[Page 49422]]

2 of the Sherman Act. Among other things, the Complaint alleged that

IBM had restrained the development and growth of: other manufacturers

of tabulating machines, attachments for tabulating machines and

tabulating cards; businesses involved in the purchase and sale of used

tabulating machinery; independent service bureaus; maintenance and

repair businesses and parts businesses. The Complaint alleged that IBM

only leased, and refused to sell, tabulating machines. Through its

lease agreements, IBM allegedly: charged lessees a single price for

machine rental, instruction and repair and maintenance; limited machine

uses; restricted attachments to, alterations in, or experimentation

with such machines; and required grant backs of any inventions

resulting from a breach of the prohibition on experimentation. The

Complaint alleged that IBM operated its service bureaus to preempt

demand for the products of other manufacturers and restrained the

growth of independent service bureaus by discriminating in favor of its

own service bureau.

The Final Judgment applies to IBM's conduct with respect to

tabulating machines and cards, both of which IBM has not manufactured

for many years, and ``electronic data processing machines.'' Certain

provisions of the Final Judgment have expired or no longer apply to

IBM's business. However, other provisions of the Final Judgment

continue to apply to IBM's electronic data processing machine business.

The United States has tentatively agreed to terminate certain

sections of the Final Judgment in their entirety: (a) Sections V(b) and

(c), which require IBM to offer to sell at no more than specified

prices and for a specified period used IBM machines that IBM acquires

pursuant to trade-ins or as a credit against sums then or thereafter

payable to IBM; and (b) Section VIII, which specifies conditions under

which IBM may engage in ``service bureau business,'' as defined by

Section II(k) of the Final Judgment. Section VIII requires IBM to

conduct its service bureau business through a subsidiary that is

required to charge prices for services it renders based upon rates that

fairly reflect all expenses properly chargeable to the subsidiary,

except that the service bureau subsidiary may reduce any price to meet

a competitor's price. Section VIII also prohibits IBM from providing

machines to its service bureau subsidiary except on the same terms and

conditions that are available to other service bureaus.

The United States also has tentatively agreed to terminate all

other provisions of the Final Judgment except as they apply to the

System/360 . . . 390 and AS/400 families of products and services

(insofar as such services are affected by Sections VI, VII, IX and XV

of the Final Judgment). These other provisions of the Final Judgment,

among other things: (a) to fulfill the purposes of the Final Judgment

in assuring to users and prospective users of IBM machines an

opportunity to purchase those machines on terms and conditions that are

not substantially more advantageous to IBM than the terms and

conditions for leases of the same machines, require IBM to sell its

machines at prices that have a commercially reasonable relationship to

the lease charges for the same machines; (b) restrict IBM's ability to

reacquire previously sold IBM machines; (c) require IBM to offer to

machine owners at reasonable and nondiscriminatory prices repair and

maintenance service for as long as IBM provides such service, provided

that the machine has not been altered or connected to another machine

in such a manner that its maintenance and repair is impractical for

IBM; (d) require IBM to offer to machine owners and to persons engaged

in the business of providing repair and maintenance services, at

reasonable and nondiscriminatory prices, repair and replacement parts

for as long as IBM has such parts available for use in its leased

machines; (e) restrain IBM from requiring that lessees or purchasers of

IBM machines disclose to IBM the uses of such machines, from requiring

that purchasers of IBM machines have those machines maintained by IBM

and generally from prohibiting experimentation with, alterations in or

attachments to IBM machines; (f) require IBM to furnish to owners of

IBM machines certain manuals, books of instructions and other documents

relating to IBM machines that IBM furnishes to its own repair and

maintenance employees; and (g) require IBM to furnish to purchasers and

lessees of IBM certain manuals, books of instruction and other

documents that pertain to the operation and application of such

machines.

IBM and the United States have each filed with the Court memoranda

setting forth their respective positions. Copies of the Complaint, the

Final Judgment, the Stipulation containing the Government's tentative

consent, the memoranda and all over papers filed in connection with

this motion are available for inspection at the Office of the Clerk of

the United States District Court, Southern District of New York, United

States Courthouse, 500 Pearl Street, New York, New York 10007 and at

Suite 215, Antitrust Division, Department of Justice, 325 7th Street

NW., Washington, DC 20530 (Telephone 202-514-2481). Copies of these

materials may be obtained from the Antitrust Division upon request and

payment of the copying fee set by the Department of Justice.

Interested persons may submit comments regarding this matter within

the sixty (60) day period established by Court order. Such comments

must be filed with the Office of the Clerk of the United States

District Court, Southern District of New York, 500 Pearl Street, New

York, New York 10007 with copies mailed at the time of filing to: (a)

counsel for IBM, Peter T. Barbur, Esq., Cravath, Swaine & Moore,

Worldwide Plaza, 825 Eighth Avenue, New York, N.Y. 10019; and (b)

counsel for the United States, Kent Brown, Attorney, Computers &

Finance Section, Antitrust Division, United States Department of

Justice. Judiciary Center Building, Suite 9901, 555 4th Street NW.,

Washington, DC 20001 (Telephone 202-307-6200).

Rebecca P. Dick,

Deputy Director of Operations.

[FR Doc. 95-23671 Filed 9-22-95; 8:45 am]

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