IBM, Justice Dept Negotiate; Settlement May Be Approaching

The Wall Street Journal

November 13, 1979

BECAUSE OF INTERNATIONAL BUSINESS MACHINE CORP.'S UNHAPPINESS OVER A FIESTY FEDERAL JUDGE, THE COMPANY'S 11-YEAR COURT BATTLE WITH THE JUSTICE DEPARTMENT MAY BE NEARING A SETTLEMENT.

THE GOVERNMENT'S ANTITRUST SUIT AGAINST THE COMPUTER GIANT HAS DRAGGED ON FOR SO LONG THAT MANY OBSERVERS, INCLUDING SOME WHO WOULD LOVE TO SEE IBM HUMBLED, ARE VIEWING IT AS A WASTE OF TIME AND MONEY. THE GOVERNMENT HAS SPENT MORE THAN $11.5 MILLION ON THE CASE SO FAR; AND IBM, WHICH HAD NET INCOME OF $3.1 BILLION LAST YEAR ON REVENUE OF $21 BILLION, IS BELIEVED TO HAVE SPENT A GOOD DEAL MORE.

TALKS THAT ARE EXPECTED TO LEAD TO NEGOTIATIONS ARE UNDER WAY, PROMPTED BY THREE APPELLATE JUDGES WHO WILL RULE ON IBM'S PETITION TO REMOVE JUDGE DAVID N. EDLESTEIN FROM THE TRIAL ON THE CONTENTION THAT HE IS BIASED AGAINST IBM. THAT UNUSUAL LEGAL MOVE ON IBM'S PART CAME OVER FOUR YEARS AFTER THE TRIAL BEGAN IN MAY 1975, AND A RULING IS EXPECTED SOON.

THE JUSTICE DEPARTMENT HAS YET TO SAY EXACTLY WHAT IT WANTS, OTHER THAN SOME SORT OF DIVESTITURE OF IBM OPERATIONS. IT ACCUSES IBM OF MONOPOLIZING WHAT IT DEFINES NARROWLY AS THE MARKETS FOR "GENERAL-PURPOSE" COMPUTERS AND PERIPHERAL PRODUCTS, THAT ARE COMPATIBLE WITH IBM EQUIPMENT. GOVERNMENT ATTORNEYS ARGUE THAT AMONG THE IBM DOCUMENTS IN EVIDENCE ARE MANY THAT DEMONSTRATE THE INTENT TO MONOPOLIZE--SOMETHING THAT MUST BE PROVED IN ADDITION TO MARKET DOMINANCE.

IBM DENIES THAT ANY DOCUMENTS SHOW ILLEGAL INTENT, AND IN ANY CASE IT INSISTS THAT THE GOVERNMENT WOULD HAVE TO PROVE IT HAS COMMITTED ILLEGAL ACTS. THE COMPANY SAYS IT'S DETERMINED TO RESIST ANYTHING LIKE DIVESTITURE, AND IT CALLS "AN ABSURDITY" A JUSTICE DEPARTMENT OFFICIAL'S PROPOSAL THAT IBM AGREE TO BEING SPLIT INTO SEVERAL COMPANIES THROUGH A SETTLEMENT.