DOJ and West/THOMSON Merger, what you can do

[James Love <love@tap.org>]

  Re:  The DOJ investigation into the WEST/THOMSON merger, 
       and what you can do.
  
  The following note is an edited version of a memo that was sent to us
  about the West/Thomson merger.  It contains a number of practical and
  thoughtful suggestions for helping the Department of Justice identify 
  the anti-competitive aspects of the proposed merger. 
  
     jamie (love@tap.org) CPT/TAP  202/387-8030
  
  ----------------------------------------------------
  According to a short article in the New York Times last 
  Thursday, the United States Department of Justice has 
  confirmed that it has commenced an anti-trust review of the 
  acquisition of West Publishing Company by the Thomson 
  Corporation.  According to the article, officials for the 
  company's maintain that the two companies operate at 
  different ends of the business.
  
  In another article on March 4, 1996, in the Connecticut Law 
  Tribune by Thomas Scheffey, a spokesperson for Thomson was 
  quoted in referring to the company products "We don't look 
  at it that way at all.  There virtual no overlap in the 
  products"....  
  
  The Law Tribune article disclosed that West had retained the 
  following counsel: Wilmer Cutler & Pickering and Wachtel, 
  Lipton, Rosen & Katz. West also is known to be represented 
  by Schatz Paquin Lockridge Grindal & Holstein P.L.L.P. which 
  has and does represents West in anti-trust litigation 
  including the pending Oasis Publishing Company case [in 
  which key documents including a presently pending motion for 
  summary judgment are under seal.]  West also was reportedly 
  represented by separate anti-trust counsel, Arthur Kaplan, 
  in connection with the antitrust investigation of the on-
  line legal publishing industry in 1994 which investigation 
  continues.
  
  The Law Tribune article stated that Thomson was represented 
  by: Shearman & Sterling. In addition, Thomson in Washington 
  matters has previously been represented by Patton Boggs.  It 
  is not known whether they are representing Thomson in 
  connection with this acquisition.
  
  The Justice Department has 30 days to determine whether to 
  approve the transaction, or it may request additional 
  information from the company.
  
  The review if being conducted by the Merger Task Force of 
  the Antitrust Division.  The Task Force consists of 
  approximately 8 attorneys who are responsible for reviewing 
  all mergers under the Hart-Scott Rodino Act.  Obviously, 
  there are more attorneys representing the acquisition 
  parties than are in the Task Force.
  
  Frequently, and because of resource and time limitations, 
  the Task Force relies upon private parties affected by a 
  merger to bring facts and analysis to the attention of the 
  Task Force.  However, the Task Force also believes that 
  those in impacted industries have the most knowledge.  In 
  some situations, those adversely affected may not have 
  organized representation that may bring information and 
  analysis to the attention of the Task Force.  The Task Force 
  reviews transactions in many industries, and cannot be 
  expected to understand the dynamics and other factors of all 
  industries.  Even though the Task Force consists of 
  practicing lawyers, they are not necessarily informed as to 
  information commonly known or available to those purchasing 
  or using legal information or involved in the various 
  aspects of legal publishing, and probably have little access 
  to situations particular to a state.
  
  The chief of the Task Force may be contacted as follows:
  
  Craig W. Conrath
  Chief
  Merger Task Force
  Antitrust Division
  United States Department of Justice
  Suite 4800
  1401 H Street, N.W.
  Washington, DC  20530
  202-307-5779
  202-307-5802 (fax)
  conratc@justice.usdoj.gov
  
  The Merger Task Force will certainly look at competition 
  between defined products, such as United States Code 
  Annotated and United States Code Service. It should be 
  noted, however, that because of the many new products 
  introduced by these companies and the absence of published 
  pricing information, market analysis is not necessarily 
  straightforward.
  
  In addition to obvious product comparisons, information that 
  may be relevant to the review includes the following:
  
  1.	New products released within the last year that 
  represent actual or potential competition.  Example: West's 
  Siegel's New York Practice CD-ROM Treatise -- Expanded 
  Edition. West's CFR etc.  Note that future and potential 
  as well as present competition is relevant.
  
  2.	Announced products by the companies.  Examples.  The 
  following "Coming Soon" CD-ROM Libraries are advertised on a 
  recent single postcard from West:  New York Code, Rules and 
  Regulations.  New York Practice TM Commercial Litigation in 
  New York State Courts.
  
  3.	Samples of marketing material showing market 
  competition between the two publishers.  Example: recent 
  full page advertisements comparing Thomson and West federal 
  practice CD-ROMs.
  
  4.	Statements and comparisons made by sales 
  representatives of the companies concerning direct 
  competition of products of the companies.  Example: 
  advantages of one company's CD-ROM search engine over the 
  other.  Advantage of CD-ROM products over on-line.  
  Advantages of CD-ROM over books of the other company.
  
  5.	Pricing deals, tie-ins and predatory pricing involving 
  competitive products, and products of either companies and 
  other companies.  An example of predatory pricing would be 
  offering a customer a CD-ROM product to existing customers 
  of a competitor at $100 below price of product of 
  competitor, and waiving initial fees.
  
  6.	Difficulty of obtaining pricing information, varying 
  pricing information, absence of printed prices, ambiguity of 
  pricing, and requirements that customers sign onfidentiality 
  agreements as to pricing.
  
  7.	Behavior of companies after acquisition of other 
  publishing companies including product changes, pricing 
  changes, cancellation of products, hirings, layoffs etc.
  
  8.	Pricing of products where competition exists as 
  compared to pricing of similar product in places where 
  competition does not exist.  Example: CD-ROM product pricing 
  in states where the companies compete directly because of 
  existence of public domain citations.
  
  
  9.  Refusal to deal.  For example, licensing the use of case 
  citations to Lexis on terms not available to other 
  publishers.
  
  10.  Impacts on quality and innovations such as new 
  products, improved products, new and improved technologies, 
  new types of products.
   
   
  11.  Information and impacts concerning other markets 
  directly affected by acquisition:
  
  (a)  The marketplace to bid on contracts to provide states 
  with full service official reporting including headnotes and 
  digest.
  
  (b)	The advertising marketplace for legal periodicals that 
  publishing advertising of the companies, financial effect 
  from reduced advertising, and reduced competition for 
  premium advertising and effects on editorial policies as 
  well.
  
  
  (c) The marketplace to provide under single contracts legal 
  information services to large institutions such as large law 
  firms, courts, and governmental legal units ... impact on 
  consumers and smaller competitors.
  
  (d)	The marketplace of related support products such as CD-
  ROM search engines, software, citators, Internet services, 
  news-type services, etc.
  
  12.	Cross-Competition.  What competition exists across 
  product types.  How do CD-ROM's compete with on-line.  Does 
  fixed price CD-ROM pricing compete with secondary source 
  materials -- i.e., if consumers are looking for leading 
  cases, how does full-text searching compete with secondary 
  source treatises.  Is there a distinctions between secondary 
  products that are considered authoritative, and those that 
  are research tools alone.
  
  13.	Agreements amongst companies.  The major players engage 
  in many cross-agreements.  The existence of some of the 
  agreements may be induced from outward appearances.  For 
  example, Auto-Cite is on Lexis.  That means there is 
  an agreement of some type between Lawyers Cooperative and 
  Lexis.  Evidence of particular agreements reveal the 
  competitive environment of the industry within which the 
  acquisition is occurring.
  
  14.  Any duplication of facilities and capabilities that may 
  result in closings and layoffs.
  
  
  --------------------
  
  Other general information such as the ability of the 
  companies to remain independent and compete as independent 
  companies.
  
  It is not necessary that comments submitted be comprehensive 
  as to subjects or comprehensive within a subject.
  
  Anecdotal information is not necessarily irrelevant.  
  Numerous anecdotal information may be probative and may 
  result in further investigation.
  
  A single specific example may permit the Task Force to 
  phrase a meaningful and intelligent request for information 
  from the companies.
  
  In addition, it is necessary to understand the nature of 
  information collection in large organizations.  If a request 
  is directed to a company lawyer by a DOJ, it is not unlikely 
  that the request in muddied as it travels through layers of 
  lawyers and down the chain of command to the operating 
  employee with the information.  As the information travels 
  back up the chain to the submitting lawyer, further 
  filtering may appear.
  
  For example, if DOJ possess a specific advertisement, and 
  then phrases a demand to the companies that would encompass 
  that advertisement, then if the advertisement is not in the 
  returned information, DOJ is better able to evaluate whether 
  the response was complete.
  
  Thus, specific pieces of information may be very valuable to 
  an investigator.
  
  Thus, we encourage those with even single issues or single 
  examples to communicate those as soon as possible to the 
  DOJ.  Immediate information is required and DOJ just does 
  not possess the internal resources to accumulate this 
  information.
  
  Please also send a copy of your submission to TAP, at P.O. 
  Box 19367, Washington, DC 20036, fax 202/234-5176.
  
  
  
  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
  James Love / love@tap.org / P.O. Box 19367, Washington, DC 20036
  Voice: 202/387-8030; Fax 202/234-5176
  Center for Study of Responsive Law
     Consumer Project on Technology; http://www.essential.org/cpt
     Taxpayer Assets Project; http://www.essential.org/tap
  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~