[Federal Register Volume 63, Number 142 (Friday, July 24, 1998)]
[Notices]
[Pages 39894-39900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19857]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


Proposed Final Judgment and Competitive Impact Statement; United 
States v. General Electric Company and InnoServ Technologies, Inc.

    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 v. General Electric Company and InnoServ Technologies, Inc., No. 
1:98CV01744RCL (D.D.C., filed July 14, 1998). On July 14, 1998, the 
United States filed a Complaint alleging that the proposed acquisition 
of InnoServ by General Electric would violate Section 7 of the Clayton 
Act, 15 U.S.C. 18. The proposed Final Judgment, filed 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). Copies of the 
Complaint, proposed Final Judgment, and Competitive Impact Statement 
are available for inspection at the Department of Justice in 
Washington, D.C., in Room 215, 325 Seventh Street, N.W., 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.
    Public comment is invited within 60 days of this notice. Such 
comments, and responses thereto, will be published in the Federal 
Register and filed with the Court. Comments should be directed to Mary 
Jean Moltenbrey, Chief, Civil Task Force, Antitrust Division, 
Department of Justice, Suite 300, 325 7th Street, N.W., Washington, 
D.C. 20530 (telephone: 202/616-5935).
Constance Robinson,
Director of Operations and Merger Enforcement, Antitrust Division.

Stipulation and Order

    The undersigned parties, by their respective attorneys, stipulate 
that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties, and venue of this action is proper 
in the District of Columbia.
    2. The Court may enter and file a Final Judgment in the form hereto 
attached upon the motion of any party or upon the Court's own motion at 
any time after compliance with the Antitrust Procedures and Penalties 
Act (15 U.S.C. 16(b)-(h)), and without further notice to any party or 
other proceedings, provided that the United States has not withdrawn 
its consent, which it may do at any time before the entry of the 
proposed Final Judgment by serving notice on defendants and by filing 
that notice with the Court.
    3. 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.
    4. If the United States withdraws its consent, or the court does 
not enter the proposed Final Judgment pursuant to the terms of the 
Stipulation, the time for all appeals of any Court ruling declining 
entry of the Final Judgment has expired, and the Court has not 
otherwise ordered continued compliance with the Final Judgment, then 
the parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    5. The parties request that the Court acknowledge the terms of this 
Stipulation by entering the Order in this Stipulation and Order.

    Dated: July 14, 1998.

    Respectfully submitted,
    FOR PLAINTIFF UNITED STATES OF AMERICA:
Joel I. Klein,
Assistant Attorney General.
John M. Nannes,
Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Mary Jean Moltenbrey,
Chief, Civil Task Force.
Susan L. Edelheit,
Assistant Chief, Civil Task Force.
Jon B. Jacobs, Fred E. Haynes, Joan H. Hogan, Peter J. Mucchetti,
Attorneys for the United States.
Bernard M. Hollander,
Senior Trial Attorney, Antitrust Division, United States Department of 
Justice, 325 Seventh Street, NW., Suite 300, Washington, DC 20530, 
(202) 514-5012.

    For Defendant General Electric Company:
Richard L. Rosen,
Arnold & Porter, 555 Twelfth Street, NW., Washington, DC 20004, (202) 
942-5499.
    For Defendant Innoserv Technologies, Inc.:
Malcolm R. Pfunder,
Gibson, Dunn & Crutcher LLP, 1050 Connecticut Avenue, NW., Washington, 
DC 20036, (202) 955-8227.

    So ordered on this ____ day of ____________
----------------------------------------------------------------------
United States District Judge.

Final Judgment

    Plaintiff, United States of America, filed its Complaint on July 
14, 1998. Plaintiff and defendants, General Electric Company (``GE'') 
and InnoServ Technologies, Inc. (``InnoServ''), by their attorneys, 
have consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law. This Final Judgment shall not 
be evidence or admission by any party with respect to any issue of fact 
or law. Defendants have agreed to be bound by the provisions of this 
Final Judgment pending its approval by the Court.
    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 GE diagnostic imaging equipment, in the sale of 
comprehensive asset-management or multi-vendor services, or in the 
licensing of advanced diagnostic software for use in any such service. 
Defendants have represented to the United States that the sale required 
below can and will be accomplished and that defendants will later raise 
no claims of hardship or difficulty as grounds for asking the Court to 
modify

[[Page 39895]]

any of the divestiture provisions contained below.
    Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is Ordered, Adjudged and Decreed:

I Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against GE and InnoServ under Section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18.

II Definitions

    As used in this Final Judgment:
    (A) ``Diagnostic imaging equipment'' means equipment that produces 
images of the interior of the human body used for diagnostic or 
therapeutic purposes in the practice of medicine.
    (B) ``GE'' means defendant General Electric Company, a New York 
corporation with headquarters in Fairfield, Connecticut, its 
successors, assigns, divisions, subsidiaries, and affiliates, each 
other person directly or indirectly, wholly or in part, owned or 
controlled by it, and each partnership or joint venture to which any of 
them is a party, and its directors, officers, employees, agents, 
consultants, or other persons acting for or on behalf of any of them.
    (C) ``InnoServ'' means defendant InnoServ Technologies, Inc., a 
California corporation with headquarters in Arlington, Texas, its 
successors, assigns, divisions, subsidiaries, and affiliates, each 
other person directly or indirectly, wholly or in part, owned or 
controlled by it, and each partnership or joint venture to which any of 
them is a party, and its directors, officers, employees, agents, 
consultants, or other persons acting for or on behalf of any of them.
    (D) ``PREVU diagnostic package'' means the intellectual property 
and any other related assets owned by InnoServ as part of its 
proprietary advanced diagnostic service, including its PREVU remote 
access software, PREVU computer, and cables necessary to interface the 
PREVU computer to diagnostic imaging equipment for the purpose of 
performing on-site and remote diagnostics.

III Applicability

    This Final Judgment applies to the defendants, and each of their 
successors and assigns, subsidiaries, affiliates, directors, officers, 
managers, agents, and employees, and all other persons in active 
concert or participation with any of them who receive actual notice of 
this Final Judgment by personal service or otherwise.

IV Sale of Prevu Diagnostic Package

    (A) GE is ordered, within 180 calendar days from the date of 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 to an acquirer acceptable to the 
United States in its sole discretion. The United States, in its sole 
discretion, may agree to an extension of this time period of up to 30 
calendar days, and shall notify the Court in such circumstances. GE 
agrees to use its best efforts to accomplish the sale as expeditiously 
as possible.
    (B) Unless the United States otherwise consents in writing, the 
sale of the PREVU diagnostic package shall include the entire PREVU 
diagnostic package and be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the PREVU diagnostic 
package can and will be utilized by the purchaser as a part of a 
viable, ongoing business. The sale, whether made by GE under this 
section or by a trustee under Section V, shall be made to a purchaser 
that, in the United State's sole judgment: (1) has the capability and 
intent of competing effectively, and (2) has the managerial, 
operational, and financial capability to compete effectively, in the 
sale of service for certain models of GE diagnostic imaging equipment, 
in the sale of comprehensive asset-management or multi-vendor services, 
or in the licensing of advanced diagnostic software for use in any such 
service. Furthermore, none of the terms of any agreement between the 
purchaser and GE shall give GE the ability unreasonably to raise the 
purchaser's costs, to lower the purchaser's efficiency, or otherwise to 
interfere in the ability of the purchaser to compete effectively.
    (C) In accomplishing the sale ordered by this Final Judgment, GE 
promptly shall make known, by usual and customary means, the 
availability of the PREVU diagnostic package. GE shall inform any 
person making inquiry regarding a possible purchase of the PREVU 
diagnostic package that the package is being sold pursuant to this 
Final Judgment and provide that person with a copy of this Final 
Judgment. GE shall offer to furnish to all bona fide prospective 
purchasers, subject to confidentiality assurances, all information and 
documents relating to the PREVU diagnostic package customarily provided 
in a due diligence process--including access to personnel, inspection 
of the assets, and any financial, operational or other documents 
relevant to the sale--except such information or documents subject to 
the attorney-client or work-product privileges. GE shall make available 
such information to the United States at the same time that such 
information is made available to any other person.
    (D) GE shall provide to the purchaser of the PREVU diagnostic 
package and to the United States information relating to the personnel 
who have the primary responsibility for the development, maintenance, 
and distribution of the PREVU diagnostic package, and training thereon, 
to enable the purchaser to make offers of employment. GE will not 
interfere with any negotiations by the purchaser to employ any such 
person.
    (E) If a sale is accomplished under this Final Judgment, GE may 
retain a non-exclusive, nonassignable license (without right to 
sublicense) to use the PREVU diagnostic package solely:
    (1) In connection with fulfilling InnoServ service contracts in 
effect on the date of GE's acquisition of InnoServ;
    (2) In connection with fulfilling any service contracts resulting 
from written proposals made by InnoServ to prospective customers that 
are outstanding on the date of GE's acquisition of InnoServ, provided 
that any such contract is entered into within 90 days of GE's 
acquisition of InnoServ; and
    (3) in connection with fulfilling any renewals of any service 
contracts described in Section IV(E)(1) or (2), so long as the renewal 
was entered into prior to any sale of the PREVU diagnostic package.

Such a license pursuant to Section IV(E)(1), (2), and (3) shall expire, 
for each such contract, on the expiration date of the contract in 
effect on the date that the PREVU diagnostic package is sold.
    (F) Nothing in this Final Judgment shall prevent the buyer of the 
PREVU diagnostic package from granting GE any non-exclusive rights to 
use the PREVU diagnostic package in addition to those rights listed in 
Section IV(E), but GE shall not make any such grant of additional 
rights a condition of the sale.

V Appointment of Trustee

    (A) If GE has not sold the PREVU diagnostic package within the time 
period specified in Section IV(A), GE shall notify the United States of 
that fact in writing. Upon application of the United States, the Court 
shall appoint a trustee selected by the United States to effect the 
sale of the PREVU diagnostic package. Until such time as a trustee has 
been appointed, GE shall continue to

[[Page 39896]]

use its best efforts to accomplish the sale of the PREVU diagnostic 
package.
    (B)After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the PREVU diagnostic package. The 
trustee shall have the power and authority to accomplish a sale at the 
earliest possible time to a purchaser acceptable to the United States 
at the best price and on the best terms as are then obtainable upon the 
reasonable effort by the trustee, subject to the provisions of Sections 
IV, V, and VI of this Final Judgment, and shall have such other powers 
respecting the PREVU diagnostic package as this Court deems 
appropriate. Subject to Section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of GE any investment bankers, 
attorneys, or other agents, who shall be solely accountable to the 
trustee, reasonably necessary in the trustee's judgment to assist in 
the sale.
    (C) GE shall not object to a sale by the trustee on any grounds 
other than the trustee's malfeasance. Any such objections by GE must be 
conveyed in writing to the United States and the trustee within ten 
calendar days after the trustee has provided the notice required under 
Section VI.
    (D) The trustee shall serve at the cost and expense of GE, on such 
terms and conditions as the Court may prescribe, and shall account for 
all monies derived from the sale of the assets sold by the trustee and 
all costs and expenses so incurred. After approval by the Court of the 
trustee's accounting, including fees for this services and those of any 
professionals and agents retained by the trustee, any remaining money 
shall be paid to GE, or GE shall pay to the trustee any expenses not 
covered by the proceeds of the sale, and the trust shall then be 
terminated. The compensation and expenses of the trustee and any 
professionals and agents retained by the trustee shall be reasonable in 
light of the value of the PREVU diagnostic package and based on a fee 
arrangement providing the trustee with an incentive based on the price 
and terms of the sale and the speed with which it is accomplished.
    (E) GE shall use its best efforts to assist the trustee in 
accomplishing a sale. The trustee and any consultants, accountants, 
attorneys, and other persons retained by the trustee shall have full 
and complete access to the personnel, books, records, and facilities 
relating to the assets to be sold, and GE shall develop financial and 
other information relevant to such assets customarily provided in a due 
diligence process as the trustee may reasonably request, subject to 
reasonable protection for trade secret or other confidential research, 
development, or commercial information. GE shall take not action to 
interfere with or to impede the trustee's accomplishment of a sale. GE 
shall permit bona fide prospective purchasers of the assets to have 
reasonable access to personnel and to make such inspection of any and 
all financial, operational, or other documents and other information as 
may be relevant to a sale under this Final Judgment.
    (F) After its appointment, the trustee, shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish a sale or license (as provided in V(G)-(H)) under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire or license, expressed an interest in 
acquiring or licensing, entered into negotiations to acquire or 
license, or was contacted or made an inquiry about acquiring or 
licensing, and interest in the PREVU diagnostic package, and shall 
describe in detail each contact with any such person. The trustee shall 
maintain full records of all efforts made to sell or license the PREVU 
diagnostic package.
    (G) If the trustee has not accomplished a sale of the PREVU 
diagnostic package within six months after its appointment, the trustee 
shall promptly file with the Court a report setting forth (i) the 
trustee's efforts to accomplish a sale, (ii) the reasons, in the 
trustee's judgment, why a sale has not been accomplished, and (iii) the 
trustee's recommendations. To the extent such reports contain 
information that the trustee deems confidential, such reports shall not 
be filed in the public docket of the Court. The trustee shall at the 
same time furnish such report to the parties, who shall each have the 
right to be heard and to make additional recommendations consistent 
with the purpose of the trust. The Court shall thereafter enter an 
order either:
    (1) Extending the trust and the term of the trustee's appointment 
to sell the PREVU diagnostic package by a period that is reasonable in 
light of the trustee's earlier efforts and any additional efforts that 
the Court believes can reasonably be made to sell the PREVU diagnostic 
package; or
    (2) Directing the trustee to proceed with licensing the PREVU 
diagnostic package pursuant to Section V(H).
    (H) Upon entry of an order by the Court pursuant to Section V(G)(2) 
directing the trustee to license the PREVU diagnostic package, or upon 
the expiration of any extended period for the sale of the PREVU 
diagnostic package ordered by the Court pursuant to Section V(G)(1), 
the trustee shall, for one year, offer perpetual, fully paid-up (at a 
reasonable royalty rate), non-exclusive licenses to the PREVU 
diagnostic package to any interested service providers of diagnostic 
imaging equipment. The rights granted to such licensees shall include 
the perpetual right to use, copy, and sublicense the PREVU diagnostic 
package and to make and copyright derivative works from it. The trustee 
shall advertise the availability of such non-exclusive licenses in at 
least one national general circulation newspaper and one medical 
diagnostic imaging equipment trade publication, which publications 
shall be approved by the United States. GE shall pay for all expenses 
reasonably incurred by the trustee in its attempts to license the PREVU 
diagnostic package under this section. The trustee shall promptly 
notify the United States and GE of any persons who acquire a license 
under this section.
    (I) If the trustee sells the PREVU diagnostic package, the trust 
will terminate when the trustee has fulfilled all its duties regarding 
the sale. Otherwise, at the end of the one-year licensing period, the 
trustee shall promptly file with the Court a report setting forth: (i) 
the trustee's efforts to license the PREVU diagnostic package, (ii) the 
name, address, and telephone number of each person who acquired a 
license, made an offer to license, expressed an interest in licensing, 
entered into negotiations to license, or was contacted or made an 
inquiry about licensing, any interest in the PREVU diagnostic package, 
and shall describe in detail each contact with any such person, and 
(iii) the trustee's recommendations about whether the trustee's 
continuing to license the PREVU diagnostic package would serve the 
public interest. To the extent such reports contain information that 
the trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The trustee shall at the same time furnish 
such report to the parties, who shall each have the right to be heard 
and to make additional recommendations consistent with the purpose of 
the trust. The Court shall thereafter enter an order either:
    (1) Extending the trust and the term of the trustee's appointment 
to license the PREVU diagnostic package by a period that is reasonable 
in light of the

[[Page 39897]]

trustee's earlier efforts and any additional benefits to the public 
interest that the Court believes would result from continuing attempts 
to license the PREVU diagnostic package; or
    (2) Terminating the trust.

VI. Notification

    (A) Within two business days following execution of a definitive 
agreement, contingent upon compliance with the terms of this Final 
Judgment, to effect any proposed sale pursuant to Section IV or V of 
this Final Judgment, GE or the trustee, whichever is then responsible 
for effecting the sale required herein, shall notify the United States 
of the proposed sale. If the trustee is responsible, it shall similarly 
notify GE. The notice shall set forth the details of the proposed 
transaction and list the name, address, and telephone number of each 
person not previously identified who offered or expressed an interest 
in or desire to acquire any ownership interest in the PREVU diagnostic 
package, together with full details of the same.
    (B) Within 15 calendar days of receipt by the United States of such 
notice, the United States may request from GE, the proposed purchaser 
or purchasers, any other third party, or the trustee (if applicable) 
additional information concerning the proposed sale and the proposed 
purchaser or purchasers, and any other potential purchaser. GE and the 
trustee shall furnish any additional information requested from them 
within 15 calendar days of the receipt of the request, unless the 
parties shall otherwise agree.
    (C) Within 30 calendar days after receipt of the notice or within 
20 calendar days after the United States has been provided the 
additional information requested from GE, the proposed purchaser or 
purchasers, any third party, and the trustee, whichever is later, the 
United States shall provide written notice to GE and the trustee, if 
there is one, stating whether or not it objects to the proposed sale. 
If the United States provides written notice that it does not object, 
then the sale may be consummated, subject only to GE's limited right to 
object to the sale under Section V(C) of this Final Judgment. Absent 
written notice that the United States does not object to the proposed 
purchaser or upon objection by the United States, a sale proposed under 
Section IV or Section V shall not be consummated. Upon objection by GE 
under Section V(C), a sale proposed under Section V shall not be 
consummated unless approved by the Court.

VII. Financing

    GE shall not finance all or any part of any purchase made pursuant 
to Section IV or V of this Final Judgment.

VIII. Preservation of Assets

    Until any sale under this Final Judgment has been accomplished:
    (A) GE shall preserve the PREVU diagnostic package in its existing 
condition and shall take no action with respect to the PREVU diagnostic 
package to cause any deterioration in the value of, or to deter any 
person from buying or licensing, the PREVU diagnostic package.
    (B) GE shall continue to license, on reasonable terms, the PREVU 
diagnostic package to the persons who are licensees on the date of GE's 
acquisition of InnoServ.
    (C) GE shall not, except as part of a divestiture approved by the 
United States, sell any part of the PREVU diagnostic package.
    (D) GE shall appoint a person or persons to oversee the PREVU 
diagnostic package, and who will be responsible for GE's compliance 
with this section.

IX Affidavits

    (A) Within 20 calendar days of the filing of the Complaint in this 
action, and every 30 calendar days thereafter until the sale has been 
completed under Section IV or V, GE shall deliver to the United States 
an affidavit as to the fact and manner of its compliance with Section 
IV or V of this Final Judgment. Each such affidavit shall include the 
name, address, and telephone number of each person who, during the 
preceding 30 days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the PREVU diagnostic 
package, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts GE has taken to solicit a purchaser for the 
PREVU diagnostic package and to provide required information to 
prospective purchasers including the limitations, if any, on such 
information. Assuming the information set forth in the affidavit is 
true and complete, any objection by the United States to information 
provided by GE, including limitations on information, shall be made 
within fourteen (14) days of receipt of such affidavit.
    (B) Within 20 calendar days of the filing of the Complaint in this 
action, GE shall deliver to the United States an affidavit that 
describes in reasonable detail all actions GE has taken and all steps 
GE has implemented on an ongoing basis to comply with Section VIII of 
this Final Judgment. GE shall deliver to the United States an affidavit 
describing any changes to the efforts and actions outlined in GE's 
earlier affidavit(s) filed pursuant to this section within 15 calendar 
days after the change is implemented.
    (C) Until one year after a sale has been completed or, if a sale is 
not completed, one year after the trust under Section V is terminated, 
GE shall preserve all records of all efforts made to preserve, sell, 
and license the PREVU diagnostic package.

X Compliance Inspection

    (A) For the purposes of determining or securing compliance with 
this Final Judgment, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon written request of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to GE, be permitted:
    (1) Access during GE's office hours to inspect and copy all books, 
ledgers, accounts, correspondence, memoranda and other records and 
documents in the possession or control of GE, which may have counsel 
present, relating to any matters contained in this Final Judgment; and
    (2) To interview, either informally or on the record, GE's 
officers, employees, or agents, who may have counsel present, regarding 
such matters. The interviews shall be subject to GE's reasonable 
convenience and without restraint or interference by GE.
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, GE shall submit such written reports, 
under oath if requested, relating to any of the matters contained in 
this Final Judgment as may be requested.
    (C) No information or documents obtained by the means provided in 
this section or Section IX shall be divulged by the United States to 
any person other than a duly-authorized representative of the executive 
branch of the United States, except in the course of legal proceedings 
to which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    (D) If at the time information or documents are furnished by GE to 
the

[[Page 39898]]

United States, GE represents and identifies in writing the material in 
any such information or documents to which a claim of protection may be 
asserted under Rule 26(c)(7) of the Federal Rules of Civil Procedure, 
and GE marks each pertinent page of such material, ``Subject to claim 
of protection under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure,'' then 10 calendar days notice shall be given by the United 
States to GE prior to divulging such material in any legal proceeding 
(other than a grand jury proceeding) to which GE is not a party.

XI Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

Competitive Impact Statement

    Plaintiff, the United States of America, 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 United States filed a civil antitrust Complaint on July 14, 
1998, alleging that General Electric Company's (``GE'') proposed 
acquisition of InnoServ Technologies, Inc. (``InnoServ'') would violate 
Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint alleges that 
GE and InnoServ compete in servicing individual pieces of GE medical 
imaging equipment and in the sale of comprehensive multi-vendor or 
asset-management services (``multi-vendor service''). Multi-vendor 
service involves contracting to service all or a significant portion of 
a hospital's medical equipment.
    The proposed combination would substantially lessen competition and 
tend to create a monopoly in the markets for servicing certain models 
of GE imaging equipment, especially GE CT scanners and magnetic 
resonance imagers (MRIs), and in multi-Vendor service. InnoServ is an 
effective competitor of GE in part because InnoServ is one of very few 
companies that has developed proprietary diagnostic software for 
servicing certain models of GE imaging equipment. The prayer for relief 
in the Complaint seeks: (a) an adjudication that the proposed merger 
would violate Section 7 of the Clayton Act; (b) a permanent injunction 
preventing the transaction's consummation; (c) plaintiff's costs of 
this action; and (d) such other relief as is just and proper.
    Prior to filing this suit, the parties reached a proposed 
settlement that permits GE to acquire InnoServ, yet preserves 
competition in the markets in which the transaction would raise 
significant competitive concerns. Along with the Complaint, the parties 
filed a Stipulation and proposed Final Judgment setting out the 
settlement terms.
    The proposed Final Judgment orders GE to divest InnoServ's 
proprietary diagnostic service software and related materials, which 
are collectively known as the PREVU diagnostic package, to an acquirer 
acceptable to the United States. Unless the United States agrees to a 
time extension, GE must complete the divestiture within 180 calendar 
days after the filing of the Complaint or five days after notice of the 
entry of this Final Judgment by the court, whichever is later.
    If GE does not complete the divestiture within the divestiture 
period, the Court, upon application of the United States, is to appoint 
a trustee selected by the United States to sell the PREVU diagnostic 
package. The proposed Final Judgment also requires that, until the 
divestiture mandated by the Final Judgment has been accomplished, GE 
must continue to license, on reasonable terms, the PREVU diagnostic 
package to persons who were PREVU licensees on the date GE acquires 
InnoServ.
    If the trustee has not sold the PREVU diagnostic package within six 
months of its appointment, it will, for one year, license the package 
at a reasonable royalty rate to any service provider unless the Court 
grants the trustee additional time to complete a sale. The licenses 
will be perpetual, fully paid-up, and non-exclusive and include the 
perpetual right to use, copy, and sublicense the package and to make 
and copyright derivative works.
    The plaintiff and defendants have stipulated that the court may 
enter the proposed Final Judgment 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 
provisions of the 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
    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 units, and nuclear-
medicine cameras. GEMS is the leading servicer of GE imaging equipment 
in the United States. GEMS also services imaging equipment manufactured 
by other companies through GE HealthCare Services, GE's wholly owned 
multi-vendor and asset-management service group.
    InnoServ, a California corporation headquartered in Arlington, 
Texas, is one of the nation's largest independent service organizations 
(``ISOs''). InnoServ services individual pieces of medical equipment 
and provides comprehensive asset management, multi-vendor maintenance 
and repair, and other specialized services for radiology, cardiology, 
biomedical, and laboratory equipment. For the fiscal year ending April 
30, 1997, InnoServ's service revenues exceeded $37 million. It has 
struggled financially for the past two years, however, 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. For some time, InnoServ has been 
seeking potential buyers of the company, but only GE has made such an 
offer.
    On May 19, 1998, the defendants signed a merger agreement providing 
that GE would acquire InnoServ's common stock for a purchase price of 
$16 million. The United States filed this suit because the proposed 
merger threatened to decrease competition.
B. Anticompetitive Consequences of the Proposed Transaction
    Competition between original equipment manufacturers such as GE and 
ISOs such as InnoServ has benefited hospitals and other owners of 
medical imaging equipment by driving down the cost of servicing their 
equipment. GE and InnoServ have been competitors in the market for 
servicing certain models of GE imaging equipment on a discrete basis 
and in the multi-vendor service market.

[[Page 39899]]

    InnoServ is one of the few competitors of GE that has developed 
proprietary diagnostic software for servicing certain models of GE 
imaging equipment. Advanced diagnostic software enables a service 
engineer to more quickly service and maintain imaging equipment. GE 
also has developed and uses its own advanced diagnostic software for 
servicing imaging equipment.
    GE's proposed acquisition of InnoServ would eliminate InnoServ as 
an independent competitor in the market for servicing certain models of 
GE imaging equipment on a discrete basis and in the multi-vendor 
service market. It would also give GE exclusive control over InnoServ's 
advanced service software. GE does not license its own advanced 
diagnostic software to competing service providers and likely would not 
license PREVU to its service competitors. Because InnoServ is an 
experienced service provider with access to advanced diagnostic 
software, GE's proposed acquisition of InnoServ would decrease 
competition and likely increase prices for imaging equipment service. 
Given InnoServ's financial difficulties, however, it is not clear 
whether it can continue as an independent competitor in these markets.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would promote additional competition in 
servicing certain models of GE imaging equipment and in multi-vendor 
service by requiring GE to divest InnoServ's proprietary diagnostic 
service software and related materials to an acquirer acceptable to the 
United States. These service materials, which are collectively known as 
the PREVU diagnostic package, give InnoServ a competitive advantage in 
servicing certain models of imaging equipment and in multi-vendor 
service. Unless the United States agrees to a time extension, GE must 
complete the divestiture within 180 calendar days after the filing of 
the Complaint in this matter or five days after notice of the entry of 
this Final Judgment by the Court, whichever is later.
    If GE does not complete the divestiture within the divestiture 
period, the Court, upon application of the United States, is to appoint 
a trustee selected by the United States to sell the assets. The 
proposed Final Judgment also requires that, until the divestiture 
mandated by the Final Judgment has been accomplished, GE must continue 
to license, on reasonable terms, the PREVU diagnostic package to 
persons who were PREVU licensees on the date GE acquires InnoServ.
    If the trustee has not accomplished the divestiture within six 
months after its appointment, the trustee shall promptly file with the 
Court a report setting forth (1) the trustee's efforts to accomplish 
the sale, (2) the reasons, in the trustee's judgment, why the sale has 
not been accomplished, and (3) the trustee's recommendations. At the 
same time, the trustee will furnish such report to the plaintiff and 
defendants, who will each have the right to be heard and to make 
additional recommendations.
    The Court will then either give the trustee additional time to 
accomplish a sale, depending on the trustee's earlier efforts and any 
additional efforts that the Court believes can reasonably be made to 
the accomplish the sale, or direct the trustee, for one year, to 
license the PREVU diagnostic package at a reasonable royalty rate to 
any service provider. The licenses will be perpetual, fully paid-up, 
and non-exclusive and include the perpetual right to use, copy, and 
sublicense the package and to make and copyright derivative works.
    At the end of the one-year licensing period, the trustee shall 
promptly file with the Court a report setting forth: (1) the trustee's 
efforts to license the PREVU diagnostic package and (2) the trustee's 
recommendations as to whether the trustee's continuing to license the 
PREVU diagnostic package would serve the public interest. The trustee 
shall at the same time furnish such report to the parties, who shall 
each have the right to be heard and to make additional recommendations. 
The Court will then either: (1) have the trustee continue to license 
the PREVU diagnostic package for a period that is reasonable in light 
of the trustee's earlier efforts and any additional benefits to the 
public interest that would result from continuing attempts to license 
the package, or (2) terminate the trust.
    If a trustee is appointed, the proposed Final Judgment provides 
that GE will pay all reasonable costs and expenses of the trustee and 
any professionals and agents retained by the trustee. After 
appointment, the trustee will file monthly reports with the parties and 
the Court, setting forth the trustee's efforts to divest or license the 
PREVU diagnostic package as ordered under the proposed Final Judgment.
    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. In addition to 
using the package in its service business, a buyer of PREVU could 
resell or license PREVU to other parties. Similarly, PREVU licensees 
could also use the package for servicing imaging equipment and/or 
sublicense PREVU to other parties. Both a buyer and licensees would be 
free to make and copyright derivative works. The ability to improve 
upon PREVU will encourage investment in developing advanced service 
software, which would further improve an entity's ability to compete 
with GE.
    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) (hereinafter ``Montana case''). The 
settlement of the Montana case should help to alleviate some of the 
competitive concerns raised by this transaction, by eliminating 
agreements that prevented numerous hospitals around the country from 
competing with GE in some of the markets affected by this transaction. 
The United States considered whether obtaining full relief in the 
Montana case, by itself, would be a sufficient remedy for this case, 
abut concluded that the Montana settlement would not fully address the 
competitive problems raised by the InnoServ transaction. The United 
States therefore required GE to divest PREVU in addition to settling 
the Montana litigation. 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.

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 that 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.

[[Page 39900]]

V. Procedures Available for Modification of the Proposed Final Judgment

    The parties have stipulated that the Court may enter the proposed 
Final Judgment after compliance with the APPA, provided that the United 
States has not withdrawn its consent. The APPA conditions that entry 
upon the Court's prior 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 give 
all comments due consideration and respond to each of them. The United 
States remains free to withdraw its consent to the proposed Final 
Judgment at any time prior to entry. The comments and responses will be 
filed with the Court and published in the Federal Register.
    Written comments should be submitted to: Mary Jean Moltenbrey, 
Chief, Civil Task Force, Antitrust Division, United States Department 
of Justice, 325 7th Street, N.W., Suite 300, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action and that 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 United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits of its Complaint to enjoin 
GE's acquisition of InnoServ. The United States is satisfied, however, 
that the divestiture of the PREVU diagnostic package will promote 
competition in the relevant markets, particularly given that InnoServ's 
poor financial condition threatens its ability to continue operations. 
Incurring the substantial costs and uncertainty of a full trial on the 
merits of the Complaint is therefore unnecessary.

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:

    (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.\1\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 16(e).

    The United States Court of Appeals for the D.C. Circuit has held 
that 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.\2\ In conducting 
this inquiry, ``[t]he 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.'' \3\ Rather,
---------------------------------------------------------------------------

    \2\ See United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. 
Cir. 1995).
    \3\ 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. Sec. 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 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.

    [A]bsent 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.\4\
---------------------------------------------------------------------------

    \4\ 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 should not engage ``in an unrestricted evaluation 
of what relief would best serve the public.'' \5\ Precedent requires 
that:
---------------------------------------------------------------------------

    \5\ United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 
1988), citing United States v. Bechtel Corp., 648 F.2d 660, 666 (9th 
Cir. 1981); see also Microsoft, 56 F.3d at 1460-62.

    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. 
[citations omitted] 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.'' [citations omitted] More 
elaborate requirements might undermine the effectiveness of 
antitrust enforcement by consent decree.\6\
---------------------------------------------------------------------------

    \6\ Bechtel, 648 F.2d at 666; 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 requires 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 of its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' '' \7\
---------------------------------------------------------------------------

    \7\ United States v. American Tel. and Tel. Co., 552 F. Supp. 
131, 151 (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 
(citations omitted); United States  v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky. 1985).
---------------------------------------------------------------------------

VIII. Determinative Documents

    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.

    Dated: July 14, 1998.

    Respectfully submitted,
Jon B. Jacobs,
Fred E. Haynes,
Joan H. Hogan,
Peter J. Mucchetti,
Attorneys for the United States, Antitrust Division, United States 
Department of Justice, 325 Seventh Street, N.W., Suite 300, Washington, 
DC 20539, (202) 514-5012.
[FR Doc. 98-19857 Filed 7-23-98; 8:45 am]
BILLING CODE 4410-11-M