The US computer leasing trade body, CDLA, the Computer Dealer and Lessors Association, has formally petitioned to become an intervenor in an attempt to derail IBM Corp’s effort to get the 1956 Consent Decree vacated. The decree forced IBM to sell outright equipment it once only rented, to make spare parts available, to repair its machines even if they had been remarketed by others and to limit its anti-competitive behaviour in other ways. CDLA is not alone in this; two other lobbying groups and a couple of individual firms are also opposing IBM’s petition to vacate the decree. The role of intervenor is part of an unusual, possibly unique process that began when IBM asked the government to abandon the deal by which it settled a 1952 government antitrust suit. The Department of Justice could have been IBM’s opposition. But the department’s Antitrust Division decided not to take a stand one way or the other. Instead, Justice invited interested opposing parties to explain why they thought IBM’s petition should be rejected. The situation is further complicated by a battle between IBM and the judge who must decide the matter. Federal Judge David Edelstein, of New York’s Southern District, has the case. He presided over the 1952 case and the creation of the consent decree. IBM says Edelstein is prejudiced and asked the judge to recuse himself. Edelstein refused and IBM is going through the probably futile effort of appealing Edelstein’s ruling on the recusal. So even though IBM, CDLA and the other parties are beginning their battle over the Decree, no significant courtroom activity can take place until IBM’s appeal of Judge Edelstein’s rejection of its recusal motion is decided. CDLA’s position is pretty simple. The group says that its very existence stems from the 1956 Consent Decree and that the free market in used IBM machines and the independent leasing trade provide vital competition. This competition makes for lower computer costs and thereby benefits end users and thus the US economy. CDLA further asserts that IBM would engage in anticompetitive behaviour that is not permissible under the 1956 Consent Decree the minute the decree is lifted. Why else, CDLA asks, would IBM want to have the decree vacated? As part of its argument, CDLA says that IBM is currently violating portions of the decree by withholding price lists (required by the 1956 settlement) and by some other practices, too. The messy situation is the result of two unfortunate peculiarities of US antitrust law and its administration.

Token attention

First, there is no simple legal procedure that anyone can use to combat perceived violations of a consent decree; enforcing the decree requires an antitrust suit. Second, the Justice Department does not police consent decrees as a matter of policy. Instead, as a matter of practice, it pays token attention to complaints by parties who say they have been injured by a consent decree violation but never gets around to filing a lawsuit. This last fact of business is more a matter of politics than of law, and it has led to some glaring inconsistencies in antitrust enforcement. If conditions were different and the risk to IBM and its adversaries more immediate, the chances are far better that the parties would hold meaningful talks. As things stand, it is a field day for the lawyers. CDLA’s action will cost an estimated $2m for legal fees, expert research to build evidence and other expenses. To fight IBM, CDLA has decided to double members’ dues; a few dozen firms, unhappy with the whole situation, have said they will leave the trade association. IBM won’t get off cheap, either, and despite the excellent track record of its lawyers, it is still taking risks by instigating the procedure. The company might have chosen to simply ignore the 1956 Consent Decree and then taken its present position as part of a defense on the off chance it ended up at the receiving end of another federal antitrust suit. – by Hesh Wiener

From the November edition of Infoperspectives International, publishedby Technology News Ltd, London NW1 1J

A. (C) 1994 Technology News Ltd.