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These were our comments today on the Proposed Final Judgment in the
DOJ/West/Thomson case on the merger. jamie
James P. Love
Consumer Project on Technology
P.O. Box 19367
Washington, DC 20036
September 3, 1996
Craig S. Conrath, Esq
Chief, Merger Task Force
U.S. Department of Justice
1401 H. Street, Suite 4000, N.W.
Washington, DC 20530
via fax 202-307-5802
re: United States v. The Thomson Corporation and West
Case No. 1:96CV01415 (U.S. District Court for the
District of Columbia)
Dear Mr. Conrath:
This letter presents the comments of the Consumer Project on
Technology (CPT) on the Proposed Final Judgment in the above
referenced case. CPT is a project of the Center for Study of
Responsive Law. CPT was created by Ralph Nader in 1995. We
maintain a page on the World Wide Web which describes our
When the Proposed Final Judgment (PFJ) was first made public,
CPT made comments to several news organizations expressing
satisfaction with the proposed divestitures, while expressing
reservations about the economic terms of the compulsory license
agreement. After having the opportunity to more closely examine the
PFJ, we reiterate our concerns about the onerous economic terms of
the compulsory license, and we express our additional concerns about
the proposed divestitures. It is our opinion that the PFJ does not
adequately protect the public interest, and that the proposed merger
should not be permitted.
CPT was pleased see that the divestiture would include the U.S.
Code Service (USC), the U.S. Reports, Lawyers Edition (L.Ed.), and
Auto-Cite, three important Thomson valued-added services which
compete with products currently offered by West Publishing.
However, legal publishers and law librarians have expressed
persuasive concerns about omissions in the list of divested
products, and raised questions about the viability of USC and L.Ed.,
if Thomson does not also divest its American Law Reports (ALRs) and
American Jurisprudence 2d (Am Jur).
At the heart of the problems over the enhanced legal products
that will be divested are the issues of economies of scope in
publishing, and the inter-related nature of the various value-added
products. The USC, L.Ed., and Auto-Cite products rely upon access
to research and analysis from ALRs in a fundamental way, and to
exclude the ALRs from the products to be divested will greatly
diminish the value of the products which are divested.
The economies of scope issue is also important. Other legal
publishers do not believe that USC and L.Ed. are economically
viable, if they are spun off without the ALRs and Am Jur products,
because of the lower cost of producing the products jointly, as
compared to the stand alone cost of producing enhanced case
analysis. These publishers believe the PFJ will create a set of
"product fragments" which cannot succeed economically on their own.
CPT did not fully appreciate the importance of the ALRs and Am
Jur publications at the time the PFJ was announced, and we would
like the record to reflect our views after having the opportunity to
more closely examine the agreement.
A third area of concern is the implementation of the
divestitures. Reed-Elsevier, the owner of Lexis-Nexis, has held
discussions with Thomson to determine what assets will actually be
sold. While we do not have access to the confidential documents
that have been shown to Reed-Elsevier, we do know that Reed-Elsevier
believes that Thomson intends to retain the Auto-Cite trained staff
and database, along with the exclusive rights to integrate Auto-Cite
with the ALRs and other Thomson products. It is one thing to divest
a trademark plus copies of the database and software, and yet
another to divest a product as a going concern. If Thomson
effectively guts the product and sells the service in name only, the
purpose of the divestiture will be undermined. Potential bidders on
these products have apparently raised these issues with DOJ.
The Compulsory License
In a June 19, 1996 press release, the DOJ emphasized the fact
that the PFJ would require Thomson to "openly license" West's page
numbering system under a system of "capped" fees. In fact, the
proposed compulsory licensing system seems to permit very little new
entry into the market for primary source case law with the use of
the West citation. Basically, publishers who seek licenses must
agree to purchase the right to use the citation for each and every
case that is cited, in each and every product that is published, in
each and every year the product is sold. A publisher who licenses
the citation to a single case for use in CD-ROM and online products
would have to pay twice for the citation, and renew the payment year
after year, with fees increasing each year. The costs for those
licenses are very high.
According to publishers, typical federal circuit court opinions
run from 20 to 40 thousand characters, and U S. Supreme Court cases
often exceed 150 thousand characters. The PFJ requires publishers
to pay 9 cents per thousand characters in the first year, increasing
to 13 cents after two years, with annual increases for inflation.
Thus, for a 30 thousand character opinion, Thomson will receive
$3.90, for each product where the opinion is published, in every
year the product is sold. This is a very high price to pay simply to
publish the law of the land.
These "capped fees" are also likely to be the minimum fees.
This particular fee structure sets very high hurdles for entry into
the market. The fee structure is strongly biased in favor of the
largest competitors to Thomson, and strongly prejudiced against
small businesses. Of course, the most important competitor to a
foreign owned Thomson/West is foreign owned Lexis-Nexis. Lexis-
Nexis will surely license the citations. But the proposed
compulsory licensing system makes it nearly impossible for many of
the innovative American small technology firms who are seeking entry
into this market to obtain the citations and become effective
competitors. This is a kind of reverse industrial policy that will
hurt consumers and American small businesses.
These fees must be paid by anyone, including not-for-profit
institutions. The license agreement is written in such a way that
the subscribers must agree to the terms of the license, and Thomson
must approve the license, making it extremely unlikely that the
citations will ever be available for browsing on the Internet.
We are concerned that the compulsory license agreement will
have the perverse effect of adding credibility to West's assertions
of copyright to the text and citations of federal court opinions,
without providing the public with any real improvements in access to
For these reasons, we urge DOJ and the court to reject the PFJ,
and we urge the DOJ to bring an antitrust case against West
Publishing which addresses the serious anticompetitive problems in
the market for legal information.
James P. Love
Consumer Project on Technology
James Love / email@example.com / 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.tap.org