"Back to DOJ Antitrust Review of Thomson/West Merger Page"
[Source:Federal Register: July 5, 1996 (Volume 61, Number 130)]
[Notices]
[Page 35250-35265]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America vs. The Thomson Corporation and West
Publishing Company; Proposed Final Judgment and Competitive Impact
Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States vs. The Thomson Corporation and West Publishing Company, Civ.
Action No. 96-1415. The proposed Final Judgment is subject to approval
by the Court after the expiration of the statutory 60-day public
comment period and compliance with the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h).
On June 19, 1996, the United States filed a Complaint seeking to
enjoin a transaction in which The Thomson Corporation (``Thomson'')
agreed to acquire West Publishing Company (``West''). Thomson and West
are two of the country's largest publishers of law books and legal
research materials. Thomson and West publish numerous competing legal
publications, including the only two annotated United States Codes and
the only two enhanced U.S. Supreme Court reporters. The Complaint
alleged that the proposed acquisition would substantially lessen
competition in the market for legal publications in violation of
section 7 of the Clayton Act, 15 U.S.C. 18, and Section 1 of the
Sherman Antitrust Act, 15 U.S.C. 1.
The proposed Final Judgment orders defendants to divest 51 legal
publications to one or more purchasers who have the ability effectively
to compete in the market for legal publications. To insure that each
divested product will be sold as a viable, ongoing line of business,
Thomson is required to divest related production assets in addition to
its rights to publication titles, and to allow the purchaser to seek to
hire employees who have been working on the products. The defendants
are also required to license openly the right to use the pagination of
individual pages in West's National Reporter System to any interested
third party for a fee. Thomson is also to grant to Lexis-Nexis options
to extend for five years its current licenses for the three important
non-legal databases: Investext, ASAP, and Preicasts. In addition,
Thomson is required to allow the state of California, Washington and
Wisconsin to reopen the bidding for contracts presently held by Thomson
for the publication of their respective official state case law
reporters. In the event any of these states choose another official
reporter, Thomson is required to divest its assets related to its
current contract and to divest its associated state digest.
A Competitive Impact Statement filed by the United States describes
the Complaint, the proposed Final Judgment, and remedies available to
private litigants.
[[Page 35251]]
Public comment is invited within the statutory 60-day comment
period. Such comments, and the responses thereto, will be published in
the Federal Register and filed with the Court. Written comments should
be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust
Division, 1401 H Street NW., Suite 4000, Washington, DC 20530
(telephone: 202-307-5779). Copies of the Complaint, Stipulation,
proposed Final Judgment and Competitive Impact Statement are available
for inspection in Room 215 of the Antitrust Division, Department of
Justice, 325 7th Street NW., Washington, DC 20530 (telephone: 202-514-
2481) and at the office of the Clerk of the United States District
Court for the District of Columbia, Third Street and Constitution
Avenue NW., Washington, DC 20001.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Lawrence R. Fullerton,
Deputy Assistant Attorney General, Antitrust Division.
United States District Court for the District of Columbia
[Competitive Impact Statment]
United States District Court for the District of Columbia
In the matter of: United States of America, 1401 H Street, NW.,
Suite 4000, Washington, DC 20530, (202) 307-1858; State of
California, by and through its Attorney General, Daniel E. Lungren,
1300 I Street, Sacramento, California 95814, (916) 324-7874; State
of Connecticut, by and through its Attorney General, Richard
Blumenthal, 110
[[Page 35260]]
Sherman Street, Hartford, Connecticut 06105, (860) 566-5374; State
of Illinois, by and through its Attorney General, Jim Ryan, 100 West
Randolph Street, Chicago, IL 60601, (312) 814-5610; Commonwealth of
Massachusetts, by and through its Attorney General, Scott
Harshbarger, 1 Ashburton Place, Boston, Massachusetts 02108, (617)
727-2200; State of New York, by and through its Attorney General,
Dennis C. Vacco, 120 Broadway, Suite 2601, New York, New York 10271,
(212) 416-8275; State of Washington, and by and through its Attorney
General, Christine O. Gregoire, 900 Fourth Avenue, Suite 2000,
Seattle, Washington 98164, (206) 464-7663; State of Wisconsin, by
and through its Attorney General, James E. Doyle, Jr., 123 West
Washington, Madison, Wisconsin 53707, (608) 266-8986; Plaintiffs,
vs. the Thomson Corporation, and One Station Place, Stamford,
Connecticut 06902, (203) 328-9400; West Publishing Company, 620
Opperman Drive, Eagan, Minnesota 55123, 1-800-328-9352, Defendants;
Civil No. 96-1415 (CRR), File: 6/25/96, Judge Charles R. Richey.
Competitive Impact Statement
The United States pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files
this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
The plaintiffs filed a civil antitrust complaint on June 19, 1996,
alleging that the proposed acquisition of West Publishing Company by
the Thomson Corporation would violate Section 7 of the Clayton Act, 15
U.S.C. 18, and Section 1 of the Sherman Antitrust Act, 15 U.S.C. 1.
West and Thomson are two of the largest publishers of legal research
materials in the United Staes.
The complaint alleges that the combination of these major
competitors would substantially lessen competition in (1) the
publication of research-enhanced cases and statutes (``enhanced primary
law'') in nine enhanced primary law product markets, (2) the markets
for certain secondary law products, and (3) the market for the
provision of comprehensive online legal research services. The prayer
for relief seeks a judgment that the proposed acquisition would violate
Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 1 of the
Sherman Antitrust Act, 15 U.S.C. 1. The prayer for relief also seeks a
preliminary and permanent injunction preventing Thomson and West from
carrying out the proposed merger, or any similar agreement,
understanding or plan.
Shortly before that suit was filed, a proposed settlement was
reached that permits Thomson to complete its acquisition of West, yet
requires extensive divestitures and takes other steps to preserve
competition in the markets in which the transaction raises significant
competitive concerns. A Stipulation and proposed Final Judgment
embodying the proposed settlement were filed at the same time the
complaint was filed.
The proposed Final Judgment orders the defendants to divest the
products listed in Exhibit A.1 and A.2 of this Competitive Impact
Statement and to offer to divest the products listed in Exhibit A.3 and
A.4 of this Competitive Impact Statement. In general, the defendants
must complete these divestitures within nine months after entry of
Final Judgment. If they do not, the Court may appoint a trustee to sell
the assets. The proposed Final Judgment further requires Thomson to
ensure that, until the divestitures mandated by the Final Judgment have
been accomplished, the products to be divested will be operated
independently as continuing, viable, ongoing lines of business, and
kept separate and apart from Thomsons and West's businesses in other
products. The proposed Final judgment also requires Thomson to license
to any publisher, for a fee, the use of ``star pagination'' (explained
below), and requires Thomson to extend the licenses of certain products
to Lexis-Nexis.
The plaintiffs and Thomson have stipulated that the proposed Final
Judgment may be entered after compliance with the APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Defendant Thomson Corporation is a corporation organized and
existing under the laws of the Province of Ontario, Canada, with its
principal office in Toronto, Ontario, Canada. It is the world's largest
publisher of information for professional markets, and it is one of the
largest publishers of legal research materials in the United States.
West Publishing Company is a corporation organized and existing
under the laws of the State of Minnesota, with its principal office in
Eagan, Minnesota. West is the largest publisher of legal research
materials in the United States, notably of court decisions contained in
its National Reporter System.
On February 25, 1996, Thomson agreed to purchase West for
approximately $3.42 billion in cash. This transaction, which would
combine West and Thomson, precipitated the Government's suit.
B. Legal Research Materials
1. Enhanced Primary Law Products
Thomson and West compete directly with each other for print and/or
CD-ROM sales in the following nine enhanced primary law product
markets: United States code; United States Supreme Court case law;
California code; California case law; Massachusetts code; Michigan
code; New York code; Washington case law; and Wisconsin case law.
For both law reporters and codes, Thomson and West provide unique,
enhanced primary law products. The enhanced case law reporters sold by
Thomson and West in the above markets are distinguishable from any
other legal research product in two respects. First, each reporter
contains the entire body of case law for its respective jurisdiction.
Second, each reporter contains comprehensive written descriptions of
points of law within the opinions, also known as ``headnotes'' and
``summaries.'' Similarly, Thomson's and West's enhanced codes are
distinguishable from other codes because they contain the entire code
for the jurisdiction and contain comprehensive written descriptions of
relevant case law relating to code sections, also known as
``annotations.'' There are no other codes or case law reporters in the
above markets that offer this set of enhancements to consumers.
Unenhanced codes sold in print are not a substitute for enhanced
primary codes, and legal researchers do not view them to be reasonably
interchangeable. First, unenhanced codes are priced significantly lower
than annotated primary codes. Second, unenhanced codes are used for
different purposes than enhanced codes. For example, unenhanced codes
are often used for the limited purposes of identifying the correct
wording of a known statute or for obtaining a brief overview of the
relevant statutes on a particular topic. Enhanced codes, unlike
unenhanced codes, are appropriate sources of information when a
researcher has a need to promptly determine judicial interpretations of
statutory language or to determine how statutes may apply to a
particular factual situation--the typical functions of an attorney
[[Page 35261]]
providing legal advice as it relates to statutes.
Likewise, unenhanced case law sold in print is not a substitute for
enhanced case law. Unenhanced case law is generally used for different
purposes than enhanced case law. For example, unenhanced case law is
useful to check the correct language in a known case. However, enhanced
primary law is necessary when the legal researcher wishes to identify
and evaluate judicial interpretation of points of law within an
opinion, what case law might apply to a particular factual situation,
or how case law can be used to support a particular legal position--the
standard practices of an attorney wishing to provide legal advice
relating to case law.
Full-text searching of primary law on Lexis-Nexis, WESTLAW, and CD-
ROM products is only a partial substitute to the enhanced primary law
offered by Thomson and West. Full-text searching is not a good
substitute, for most users and most uses, because it does not provide
users with the editorial analysis of the West or Thomson enhanced
primary materials.
Purchasers desiring to purchase enhanced codes would not turn to
any alternative product in sufficient numbers to defeat a small but
significant increase in price. In addition, purchasers desiring to
purchase enhance case law reporters would not turn to any alternative
product in sufficient numbers to defeat a small but significant
increase in price.
2. Secondary Law Materials
Thomson and West also compete against each other for print and/or
CD-ROM sales of national and state-oriented secondary law products,
such as treatises and practice guides. Each of these competing
products, together with similar competing products, is contained within
a relevant secondary law product market (``relevant secondary law
product markets''). One product from each such relevant secondary law
product market is identified in Exhibit A (in addition to the enhanced
primary law listed therein, as noted above). In each relevant secondary
law product market, West and Thomson are either dominant or significant
competitors.
Secondary law materials are used by researchers to become familiar
with the law both before and after turning to primary law materials.
These secondary materials enable the legal researcher, who might not
have expertise in a particular area of the law, to begin his or her
research in a focused manner. Secondary sources of law lead researchers
to relevant case law, statutes, and other secondary law products.
Secondary sources of law can also be used by researchers to provide
clarification of primary law.
Purchasers desiring to purchase any of the secondary law products
in the relevant secondary law product markets alleged in the complaint
would not turn to any alternative product in sufficient numbers to
defeat a small but significant increase in price.
3. Comprehensive Online Legal Research Services
West, through WESTLAW, is one of two major competitors in the
provision of comprehensive online legal research services; the other
competitor is Lexis-Nexis. WESTLAW and Lexis-Nexis are the two largest
comprehensive online legal research services and they compete directly
with one another.
West places its own primary and secondary law products on WESTLAW.
Lexis-Nexis places its own and third parties' materials on its service,
including some Thomson enhanced primary and secondary law products.
Thomson licenses to Lexis-Nexis, among other products, the Auto-Cite
electronic citator service. Auto-Cite is used to gather negative
commentary on a case and quickly determine case history for use in
correct citation. Thomson also licenses to Lexis-Nexis the United
States Code Service, as well as several other Thomson enhanced primary
law materials, and certain non-legal materials.
Print versions of the law are not adequate substitutes for
comprehensive online legal research services. Legal researchers who
have the necessary computer hardware and the necessary skills to use
this product value the timeliness and speed of comprehensive online
legal research services. Material provided on a comprehensive online
legal research service is updated often and is thus more timely than
material offered in printed form.
Full-text word searching of primary law on CD-ROMs is not an
adequate substitute for comprehensive online legal research services.
The content of most CD-ROMs is limited to a particular jurisdiction or
topic. Moreover, the material contained on CD-ROMs is not as current as
the material offered on an online legal research service. If the
materials on CD-ROMs are not current, lawyers must still use online
legal research services to supplement their research. Furthermore, the
topical or limited jurisdictional focus of CD-ROMs limits their primary
appeal to smaller law firms or firms specializing in a particular area
of the law. These firms are not heavy users of comprehensive online
legal research services.
While the Internet is a useful tool for some researchers, it is not
a substitute for Lexis-Nexis and WESTLAW for several reasons. First,
the material contained on the Internet is not nearly as comprehensive
as the material offered on Lexis and WESTLAW. The Internet does not
provide access to historical opinions, every court's opinions, every
jurisdiction's statutes, or the number of secondary law products that
Lexis-Nexis and WESTLAW offer. Second, the Internet's search mechanism
is not as sophisticated or effective as Lexis-Nexis' or WESTLAW's.
Third, the case law offered on the Internet does not provide citations
that are accepted by courts or are relied on by attorneys.
Purchasers of comprehensive online legal research services would
not turn to any alternative product in sufficient numbers to defeat a
small but significant increase in price. Therefore, the provision of
comprehensive online legal research services is an appropriate product
market in which to assess the competitive effects of the acquisition.
C. Competition Between West and Thomson
Thomson and West compete directly to provide enhanced primary law
in the relevant markets and consumers view the Thomson and West
products as their first and second choices for primary law products.
Indeed, in each relevant market, the Thomson and West products are the
only printed products to which consumers can turn for enhanced primary
law, and, to the limited extent to which full-text searching is a
research enhancement, enhanced primary law products are offered by only
Thomson, West, Lexis-Nexis and a few CD-ROM publishers.
It is unlikely that an entrant could offer comparable products, for
three reasons. First, the entrant would have to compile an historical
collection of cases. Second, the entrant would have to develop a
sophisticated editorial staff capable of creating editorial
enhancements that customers would accept as reliable. Third, West
claims that its copyright is infringed by what is commonly referred to
as ``star pagination,'' the insertion of symbols in the text of
decisions to indicate where internal page breaks are in West's National
Reporter System, and the placement nearby of the corresponding West
reporter's page number. West page numbers are commonly required or
expected by courts. West has granted few, if any, licenses to employ
star pagination. Thus, existing or potential
[[Page 35262]]
participants in the markets for primary law products cannot offer
products with star pagination without the threat of costly infringement
litigation.
West and Thomson also aggressively compete against each other in
the sale of several secondary law products, referred to in Exhibit B.
Thomson and West are the only publishers--or two of very few
publishers--in each relevant secondary law product market. As with
enhanced primary law, it is unlikely that an extrant would be able to
offer comparable products. Thomson's and West's titles are established
resources and it would take a long time for a putative entrant to
overcome West's and Thomson's acceptance by consumers. Furthermore,
West's claim of copyright infringement for ``star pagination'' has a
significant effect on the competitive viability of CD-ROM products,
where it would be possible to include both primary and secondary law
products on the same CD-ROM.
Thomson and West compete vigorously on the basis of price for both
enhanced primary law products and secondary law products. Thomson and
West look almost exclusively to each other in making pricing decisions
and promoting both their enhanced primary and their secondary law
products in the relevant markets, and consumers have benefitted from
this competition. Thomson and West also compete directly on the basis
of quality. The quality of Thomson's and West's enhanced primary and
secondary law products has improved as a result of such competition.
Unless restrained, the proposed acquisition would allow the combined
entity unilaterally to raise prices without the threat of a new entry
into these markets by a third party. Unless restrained, the proposed
acquisition would also have an adverse effect on the quality of
enhanced primary law products and secondary law products.
In the comprehensive online legal research services market, Thomson
supplies enhanced primary law, secondary law products, non-legal
products, and Auto-Cite to Lexis-Nexis. West offers the competing
WESTLAW service, and consumers have benefitted from the vigorous
competition that has existed between Lexis-Nexis and WESTLAW. To
effectively compete against WESTLAW, Lexis-Nexis depends upon access to
certain products that Thomson licenses to Lexis-Nexis. Unless
restrained, the proposed acquisition will increase Thomson's incentive
to exercise market power by increasing prices for, reducing quality and
innovation of, or withholding access to certain products that Thomson
licenses to Lexis-Nexis.
D. Anticompetitive Consequences of the Acquisition
The complaint alleges that Thomson's acquisition of West would
substantially reduce or eliminate competition in (1) nine relevant
enhanced primary law product markets, (2) the publication of secondary
law in the relevant secondary law product markets and (3) the market
for the provision of comprehensive online legal research services.
The complaint alleges that the acquisition would increase
concentration significantly in the nine relevant enhanced primary law
product markets and in the secondary law product markets. After the
acquisition, the combined Thomson/West entity would dominate these
relevant markets. Using a measure of market concentration called the
HHI, defined and explained in Exhibit C, a combination of Thomson and
West would substantially increase concentration in each of the nine
relevant enhanced primary law product markets. The post-merger HHIs and
increases in the HHIs for each market are listed in Exhibit C. Post-
merger HHIs range between 4521 and 9010; increases range from 959 to
4234.
The complaint also alleges that it is unlikely that a new entrant
would enter into any of these relevant markets that would be capable of
restraining any anticompetitive increase in price within a two-year
period. In the nine relevant enhanced primary law product markets and
in the secondary law product markets, there is now competition between
the parties that would end after the acquisition, risking price
increases and reduced product quality and innovation for consumers.
In the market for the provision of comprehensive online legal
research services, Lexis-Nexis depends upon access to some of Thomson's
products to compete effectively against WESTLAW. The complaint alleges
that the acquisition is likely to lessen competition substantially in
the market for comprehensive online legal research services by
increasing Thomson's incentive to increase the prices of, reduce the
quality of, or withhold access to certain materials it provides to
Lexis-Nexis. As a result of such an exercise of market power, there
could be material injury to Lexis-Nexis' ability to compete
effectively, and thus harm to competition in this market. In the event
of such an exercise of market power by Thomson, Lexis-Nexis would be
unable or unlikely to replace the licensed Thomson products in such a
way, or within such time, as to maintain the level of competition that
existed between WESTLAW and Lexis-Nexis before the acquisition. Reduced
competition in the provision of comprehensive online legal research
services would mean higher prices and reduced product quality and
innovation for consumers of those services.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in the nine
enhanced primary law product markets. The proposed Final Judgment
requires the divestiture of enhanced code products for the United
States, California, Massachusetts, Michigan, and New York. It also
requires the divestiture of U.S. Reports, L.Ed., a United States
Supreme Court case law reporter. Divestiture of these, and all products
to be divested pursuant to the proposed Final Judgment, must be
accomplished by Thomson within nine months after entry of the Final
Judgment. The defendants must divest the assets and rights associated
with the divested products in such a way as to satisfy the plaintiffs
that the divested products can and will be operated by the acquirer as
viable, ongoing product lines, and that until the divestiture, the
defendants will maintain them as such.
The proposed Final Judgment also permits states to reopen bidding
of three state contracts to publish the official state reporter. This
process will allow the states effectively to cause a divestiture of the
state reporters are all contracted by a bid process, the reopening of
the bidding would stimulate competition in the publication of state
reporters.
Furthermore, under the proposed Final Judgment, one secondary law
product in each of the secondary law markets will be divested.
Competition from buyers of the divested secondary products should cause
Thomson to continually enhance and improve its products in response to
such competition. Thus, the proposed Final Judgment would preserve
competition in the secondary law product markets.
The proposed Final Judgment also requires Thomson to license the
use of star pagination in the National Reporter System to other legal
publishers. As noted above, West has claimed that a license is required
for star pagination. There is pending litigation over the validity of
West's copyright claim. See Oasis Publishing Co. v. West Publishing
Co., F. Supp. , 1996 WL 264773 (D.Minn. 1996); Matthew Bender and
Company, Inc. v. West Publishing Co., Docket No. 94-CIV-0589
(S.D.N.Y.).
[[Page 35263]]
However, West has asserted a copyright claim and has thus far
prevailed in litigation. As a result, only two licenses to use West
pagination have been issued by West. This has created a barrier to
entry for enhanced primary law and secondary law products incorporating
such pagination. The proposed Final Judgment would allow any person to
license use of the West pagination at maximum prices. Thus, the
proposed relief reduces one important barrier to entry and provides
publishers who wish to produce such products with a new option for
introducing products that will compete with Thomson/West. Thus, this
relief, together with the divestitures of enhanced primary and
secondary law products, will aid in maintaining the vigorous
competition in these markets that has existed before the merger.
The proposed Final Judgment should not be read to suggest that the
plaintiffs believe that a license is required before a legal publisher
may star paginate to defendants' products. Indeed, the Antitrust
Division expressly reserves the right to assert its views concerning
the extent, validity, or significance of any intellectual property
right claimed by defendants, in judicial proceedings or in any other
forum. The proposed Final Judgment shall have no impact whatsoever on
any adjudication concerning these matters.
Additionally, pursuant to the proposed Final Judgment, Thomson must
divest itself of Auto-Cite and extend the terms of existing licenses of
Investext, ASAP and Predicasts databases to Lexis-Nexis. The
divestiture of Auto-Cite will ensure that Thomson-West cannot injure
competition in the comprehensive online legal research services market
by increasing prices for, reducing quality and innovation of, or by
denying Lexis-Nexis access Auto-Cite. Likewise, the extension of the
licenses will ensure that Lexis-Nexis will have access to these
resources while it has the opportunity to make appropriate competitive
adjustments. Furthermore, the divestiture of the enhanced primary law
products and the secondary law products would enable the new owner of
those products to make them available to Lexis-Nexis without the owner
having the anticompetitive incentive that arises from owning the main
Lexis-Nexis competitor.
If the defendants fail to divest the divestiture products within
nine months after entry of final judgment, the Court, upon application
of the United States, shall appoint a trustee nominated by the United
States to effect the divestiture. If a trustee is appointed, the
proposed Final Judgment provides that Thomson will pay all costs and
expenses of the trustee and any professionals and agents retained by
the trustee. The compensation paid to the trustee and any persons
retained by the trustee shall be both reasonable in light of the value
of the Divested Products and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished. After
appointment, the trustee will file monthly reports with the parties and
the Court setting forth the trustee's efforts to accomplish the
divestiture ordered under the proposed Final Judgment. If the trustee
has not accomplished the divestiture within six (6) months after its
appointment, the trustee shall promptly file with the Court a report
setting forth (1) the trustee's efforts to accomplish the required
divestiture, (2) the reasons, in the trustee's judgment, why the
required divestiture has not been accomplished, and (3) the trustee's
recommendations. At the same time, the trustee will furnish such report
to the parties, who will each have the right to be heard and to make
additional recommendations consistent with the purpose of the trust.
The proposed Final Judgment requires that Thomson maintain the
Divested Products separate and apart pending divestiture.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final
Judgment
The plaintiffs and the defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. The United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to entry. The comments and the response of the United States will be
filed with the Court and published in the Federal Register.
Written comments should be submitted to:
Craig W. Conrath, Chief, Merger Task Force, Antitrust Division, United
States Department of Justice, 1401 H Street NW., Suite 4000,
Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The plaintiffs considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of their complaint against
Thomson. The plaintiffs are satisfied, however, that the divestiture of
the assets and other relief contained in the proposed Final Judgment
will preserve viable competition in (1) the nine enhanced primary law
product markets, (2) the markets for the relevant secondary law
products, and (3) the market for the provision of comprehensive online
legal research services. Thus, the proposed Final Judgment would
achieve the relief the government would have obtained through
litigation, but avoids the time, expense and uncertainty of a full
trial on the merits of the complaint.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' In making
that determination, the court may consider--
[[Page 35264]]
(1) 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;
(2) the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e) (emphasis added). As the United States Court of Appeals
for the DC Circuit recently held, this statute permits a court to
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See United States v. Microsoft, 56 F.3d
1448, 1461-62 (D.C. Cir. 1995).
In conducting this inquiry, ``the Court is nowhere compelled to go
to trial or to engage in extended proceedings which might have the
effect of vitiating the benefits of prompt and less costly settlement
through the consent decree process.'' \1\ Rather,
\1\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. 16(f), those procedures are discretionary. A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong.
2d Sess. 8-9, reprinted in (1974) U.S. Code Cong. & Ad. News 6535,
6538.
---------------------------------------------------------------------------
absent a showing of corrupt failure of the government to
discharge its duty, the Court, in making its public interest
finding, should . . . carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.
61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert denied, 454 U.S. 1083 (1981);
see also Microsoft, 56 F.3d at 1460-62. Precedent requires that
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\2\
---------------------------------------------------------------------------
\2\ Bechtel, 648 F.2d at 666 (citations omitted) (emphasis
added); see BNS, 858 F.2d at 463; United States v. National
Broadcasting Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978);
Gillette, 406 F. Supp. at 716. see also Microsoft, 56 F.3d at 1461
(whether ``the remedies [obtained in the decree are] so inconsonant
with the allegations charged as to fall outside of the `reaches of
the public interest''') (citations omitted).
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment require a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.' (citations
omitted).''\3\
---------------------------------------------------------------------------
\3\ United States v. American Tel. and Tel. Co., 552 F. Supp.
131, 150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States,
460 U.S. 1001 (1983), quoting Gillette Co., 406 F. Supp. at 716,
United States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D.
Ky. 1985).
---------------------------------------------------------------------------
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: June 25, 1996.
Respectfully submitted,
Craig W. Conrath,
Chief, Merger Task Force, U.S. Department of Justice, Antitrust
Division, Merger Task Force, 1401 H Street, N.W., Suite 4000,
Washington, D.C. 20530, (202) 307-5779.
Exhibit A
Exhibit A.1
U.S. Code Service
U.S. Reports, L.Ed.
U.S. Digest
Manual of Federal Practice, 4th Ed.
Bankruptcy Law & Practice, 6th Ed.
Bankruptcy (Epstein, Nickels & White)
Corbin on Contracts
Insurance Law (Appleman)
Search & Seizure (Thomson)
Ballantine's Law Dictionary
Auto-Cite
Deering's Annotated California Code
California ADR Practice Guide
California Civil Practice Handbook: Choice Between State and Federal
Courts
California Civil Trialbook
California Litigation By the Numbers Court Rules Companion
California Negligence & Settlement
California Products Liability Law & Practice
California Trial
California Tort Law
Modern California Discovery
Colorado Trial Handbook
Trial Handbook for Connecticut Lawyers
Florida Criminal Practice & Procedure
Florida Evidence 2d
Illinois Jurisprudence
Indiana Appellate Handbook 2d
Kentucky Probate PSL
Kentucky Workers' Compensation PSL
Louisiana Code of Evidence--Annotated
Louisiana Successions
Louisiana Workers' Compensation
Annotated Laws of Massachusetts
Massachusetts Corporations PSL
Massachusetts Domestic Relations PSL
Massachusetts Landlord-Tenant Law
Massachusetts Real Estate PSL
Michigan Criminal Law
Michigan Statutes Annotated
Michigan Digest
New Jersey Criminal Procedure
New York Consolidated Laws Service
New York Wills and Trusts
Ohio Family Law
Ohio Probate
Modern Texas Discovery
Texas Civil Pre-Trial Procedure
Texas Trial and Appellate Practice
Washington Trial Handbook
Exhibit A.2
Michigan Law & Practice
New York Estate Administration
Pennsylvania Law Encyclopedia
Exhibit A.3
California Appellate Reports
California Reports
California Reports Advance Sheets
Washington Appellate Court Reports
Washington Supreme Court Reports
Wisconsin Official Reports
Wisconsin Official Reports Advance Sheets
Exhibit A.4
California Digest
Wisconsin Digest
Exhibit B
Secondary Law Products
U.S. Digest
[[Page 35265]]
Manual of Federal Practice, 4th Ed.
Bankruptcy Law & Practice, 6th Ed.
Bankruptcy (Epstein, Nickels & White)
Corbin on Contracts
Insurance Law (Appleman)
Search & Seizure (Thomson)
Ballantine's Law Dictionary
California ADR Practice Guide
California Civil Practice Handbook: Choice Between State and Federal
Courts
California Civil Trialbook
California Litigation By the Numbers Court Rules Companion
California Negligence & Settlement
California Products Liability Law & Practice
California Digest
California Trial
California Tort Law
Modern California Discovery
Colorado Trial Handbook
Trial Handbook for Connecticut Lawyers
Florida Criminal Practice & Procedure
Florida Evidence 2d
Illinois Jurisprudence
Indiana Appellate Handbook 2d
Kentucky Probate PSL
Kentucky Workers' Compensation PSL
Louisiana Code of Evidence--Annotated
Louisiana Successions
Louisiana Workers' Compensation
Massachusetts Corporations PSL
Massachusetts Domestic Relations PSL
Massachusetts Landlord-Tenant Law
Massachusetts Real Estate PSL
Michigan Criminal Law
Michigan Digest
Michigan Law & Practice
New Jersey Criminal Procedure
New York Wills and Trusts
New York Estate Administration
Ohio Family Law
Ohio Probate
Pennsylvania Law Encyclopedia
Modern Texas Discovery
Texas Civil Pre-Trial Procedure
Texas Trial and Appellate Practice
Washington Trial Handbook
Wisconsin Digest
Exhibit C
Definition of HHI and Calculations for Nine Markets
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of thirty, thirty, twenty, and twenty percent, the HHI is
2600 (30<SUP>2+30<SUP>2+20<SUP>2+20<SUP>2=2600). The HHI takes into
account the relative size and distribution of the firms in a market and
approaches zero when a market consists of a large number of firms of
relatively equal size. The HHI increases both as the number of firms in
the market decreases and as the disparity in size between those firms
increases.
Markets in which HHI is between 1000 and 1800 are considered to be
moderately concentrated, and those in which the HHI is in excess of
1800 points are considered to be concentrated. Transactions that
increase the HHI by more than 100 points in concentrated markets
presumptively raise antitrust concerns under the Merger Guidelines. See
Merger Guidelines Sec. 1.51.
The HHIs for the nine primary law markets are as follows:
------------------------------------------------------------------------
Post HHI
merger increase
------------------------------------------------------------------------
The market for:
Enhanced United States Supreme Court case law........ 5023 959
Enhanced United States statutory law................. 9019 3964
Enhanced California statutory law.................... 8088 3866
Enhanced California case law......................... 4762 1540
Enhanced New York statutory law...................... 8686 3792
Enhanced Massachusetts statutory law................. 8954 4234
Enhanced Michigan statutory law...................... 8702 4196
Enhanced Washington case law......................... 4521 996
Enhanced Wisconsin case law.......................... 5535 2424
------------------------------------------------------------------------
Certificate of Service
I, Keith S. Blair, hereby certify that on June 25, 1996, I caused a
copy of the Competitive Impact Statement, filed this day in United
States v. The Thomson Corporation and West Publishing Company, to be
served on defendants the Thomson Corporation and West Publishing
Company by having a copy mailed, first class, postage prepaid, to:
Wayne D. Collins, Esq., Shearman & Sterling, Citicorp Building, 153
East 53rd Street, New York, New York 10022, Counsel for The Thomson
Corporation.
James E. Schatz, Esq., Schatz Paquin Lockridge Grindal & Holstein
P.L.L.P., Suite 2200, 100 Washington Avenue So., Minneapolis, MN 55401,
Counsel for West Publishing Company.
Dated: June 25, 1996,
Keith S. Blair.
[FR Doc. 96-16891 Filed 7-3-96; 8:45 am]
BILLING CODE 4410-01-M