In March, preliminary activities in the New York Federal Court that will hear IBM’s plea to rescind the 1956 consent decree moved in a direction that appears to favour IBM. The hearings are the result of IBM’s effort to free itself from deal it struck with the US Department of Justice to end an anti-trust suit brought in 1952. The constraints imposed on IBM require it to sell as well as rent equipment, to allow non-IBM equipment to be plugged into IBM machinery, to refrain from making markets in its own used equipment once the equipment has been sold, to provide spare parts for computing devices and to stay out of the services business except through an arm’s length subsidiary. Until the recent hearings, it appeared that the efforts of the Department of Justice’s Antitrust Division would be supplemented by those of outsiders accepted by the court.
By Hesh Wiener
The technical term for the role played by these outsiders – which include the computer dealers and lessors CDLA trade association – is that of intervenor. An intervenor not only has the opportunity to present its views but also to appeal any ruling handed down by the court. Now it appears that the outside parties will be restricted to filing arguments that can influence the proceedings but not in a way that gives them special standing. The pleadings of these outsiders are expected to be limited to amicus curiae (friend of the court) briefs, which can be important but which do not give the outside parties any opportunity to disagree (via the appeals process) with the court’s treatment of evidence and arguments the amicus briefs contain. The change in tone is said by sources familiar with the situation to be a byproduct of the battle between the head of the Antitrust Division, Anne Bingaman, and Federal Judge Stanley Sporkin in the case against Microsoft. The Justice Department was widely criticised for being weak and ineffectual in that matter and its current attempt to become the sole adversary against IBM appears to be a way of showing that it has a willingness to exercise its power. But the history of the Justice Department’s view of IBM, which has in recent years flagrantly ignored aspects of the 1956 consent decree with impunity, suggests that the result will be a sham. The computer industry has changed enormously since the 1956 decree was signed and there is every reason for the courts to give the agreement a serious, critical review. IBM’s claim that the decree is entirely obsolete has some merit. But so do other points of view. Since the decree was put in place, system software has become an intrinsic and vital part of computers, as necessary for their operation as any circuitry. The aspects of the 1956 consent decree that compel IBM to sell as well as rent its products on an even-handed basis have not been applied to system software, which IBM does not sell at all when it markets multi-user systems. IBM only rents its software and, by wrapping this practice in the cloak of intellectual property licensing, has disguised its true behaviour from a Justice Department that is bent on ignoring conditions in the computer industry, not only those involving IBM. If the judge in the case, Allen G Schwartz, had any gumption, he would not even consider putting a matter as important as a defence or review of the 1956 consent decree in the hands of a government bureau that has displayed appalling insensitivity, ignorance , lassitude and hypocrisy in the matter before the court and in related matters. But what might be does not appear likely, and the smart money is betting IBM’s brilliant legal team will easily outwit its adversaries in this matter.
Decadent
The IBM argument, stripped of legalese and formality, will be that the company is a vital American resource, that it is not a monopoly (in the context of the computer industry as a whole), that it has been unfairly hobbled by an obsolete agreement and must have the same freedoms as any other computer company. That IBM nearly collapsed a couple of years ago will be treated as e
vidence that it should be cut loose. Nobody will point out with any effectiveness that it is the lack of anti-trust enforcement, not its overzealous application, that enabled IBM to become so bloated, decadent and inept that it nearly choked itself to death. Infoperspectives International, published by Technology News Ltd, 110 Gloucester Avenue, London NW1 (C) 1995 Technology News Ltd.
