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

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.

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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.

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\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.''

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``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.

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\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.

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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\

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\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).

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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\

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\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.

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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.

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\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).

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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\

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\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.

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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.

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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]

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