United States District Court; Southern District of New York United States of America, Plaintiff, vs. International Business Machines Corporation, Defendant

DEPARTMENT OF JUSTICE

Antitrust Division

[Civil Action No. 56-344 (AGS)]

United States District Court; Southern District of New York--

United States of America, Plaintiff, vs. International Business

Machines Corporation, Defendant

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''). IBM and the United States of America

have consented to modify the Final Judgment to establish specific

sunset periods for all provisions currently in effect, but the parties

have reserved the right to withdraw their consent for at least 90 days

after publication of this Notice. Prior to entry of an order modifying

the Final Judgment, the Court and the parties will consider public

comments. Any such comments on the proposed termination described in

this Notice must be filed within 60 days following the publication of

the last notice required by the Court's Order Directing Publication.

The Complaint, Final Judgment and proposed modification are further

described below.

The Complaint, filed on January 21, 1952, alleged that IBM had

monopolized, attempted to monopolize and restrained trade in the

tabulating industry, in violation of Sections 1 and 2 of the Sherman

Act. The Final Judgment was entered by consent between the United

States and IBM. 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'' (``computers''). 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 computer

business. On June 13, 1994, IBM filed its motion to terminate

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the remaining provisions of the Final Judgment.

The Court, on January 17, 1996, terminated certain sections of the

Final Judgment in their entirety: (a) Sections V (b) and (c), which

required IBM to offer to sell at no more than specified prices and to

hold for a specified period used IBM machines that acquired pursuant to

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

IBM; and (b) Section VIII, which specified conditions under which IBM

could engage in ``service bureau business,'' as defined by Section

II(k) of the Final Judgment. The Court also terminated all other

provisions of the Final Judgment as they applied to all IBM computer

products and services, except as they applied to as the AS/400 and

System/360 * * * 390 families of products and services.

On July 2, 1996, the United States and IBM entered into a

stipulation whereby the parties agreed to establish sunset periods for

all remaining substantive provisions of the Final Judgment--Sections

IV, V, VI, VII, IX, and XV--as they apply to the AS/400 and System/360

* * * 390 families of products and services. Section IV fulfills the

purpose of the Final Judgment in assuring to current and prospective

IBM customers an opportunity to purchase machines on terms and

conditions that are not substantially more advantageous to IBM than the

terms and conditions for leases of the same machines and requires IBM

to sell its machines at prices that have a commercially reasonably

relationship to the lease charges for the same machines. Section V

restricts IBM's ability to re-acquire previously sold IBM machines.

Section VI requires 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 and requires 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. Section VII restrains 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 attachment to IBM

machines. Section IX requires IBM to furnish to owners of IBM machines

manuals, books of instructions and other documents relating to IBM

machines that IBM furnishes to its own repair and maintenance employees

and requires IBM to furnish to purchasers and lessees of IBM machines

manuals, books of instruction and other documents that pertain to the

operation and application of such machines. Finally, Section XV enjoins

IBM from entering into certain agreements to allocate markets or

restrain imports into the United States or exports out of the United

States and from conditioning the sale or leases of certain machines

upon the purchase or lease of any other machine.

The United States and IBM have agreed to modify the Final Judgment

to establish specific sunset periods for all provisions currently in

effect. The parties agreed to terminate Section IV (b)(3) and (c)(7)

and Section VII(d)(1) immediately upon entry of an Order by the Court.

With respect to the AS/400 family of products and services, the parties

have agreed to terminate: (a) Section V(a) immediately upon entry of an

Order by the Court; (b) Section IV (except Section IV(c)(3) as it may

apply to the provision of operating systems, an interpretation that the

United States holds and with which IBM does not agree) and Section

VI(a) 6 months after entry of an Order by the Court; (b) Section IV

(except Section IV(c)(3) as it may apply to the provision of operating

systems, an interpretation that the United States holds and with which

IBM does not agree) and Section VI(a) 6 months after entry of an Order

by the Court and all other provisions of the Final Judgment

as they apply to the AS/400, including Section IV(c)(3) as it may apply

to operating systems, on July 2, 2000. With respect to the System 360 *

* * 390 and the remainder of the Final Judgment, the parties have

agreed to terminate all remaining provisions on July 2, 2001. Thus,

under the agreement between the United States and IBM, as of July 2,

2001, the Final Judgment will be terminated in its entirety.

The United States has filed with the Court a memorandum setting

forth its position with respect to modifying the Final Judgment as it

applies to the AS/400 and System/360 * * * 390. Copies of the

Complaint, the Final Judgment, the Stipulation containing the parties'

tentative consent, the memoranda and all other papers filed in

connection with this motion are available for inspect 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 (Telephone

212-474-1058); and (b) counsel for the United States, N. Scott Sacks,

Assistant Chief, Computers & Finance Section, Antitrust Division,

United States Department of Justice, Suite 9500, 600 E. Street, NW.,

Washington, DC 20530 (Telephone 202-307-6132).

Constance K. Robinson,

Director of Operations.

[FR Doc. 96-19282 Filed 7-29-96; 8:45 am]

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