US sues Computer Associates, Platinum

By : |September 29, 2001 0

WASHINGTON: The Justice Department on Friday sued Computer Associates
International Inc. for $1.3 million, alleging the company and its 1999 merger
partner Platinum Technology International Inc. illegally fixed prices by
restricting price discounts offered by Platinum before regulators approved their

The civil suit charges the erstwhile competitors of a tactic known as
"gun-jumping." Computer Associates, whose $3.5 billion acquisition of
Platinum Technology was ultimately approved, dismissed the allegations as
"unfounded" and said it would fight the charges
"vigorously." The Justice Department alleged that the merger agreement
between the two companies imposed "extraordinary conduct of business
restrictions on Platinum, preventing certain competitive activities during the
(merger review) period."

The department said that while the merger was still under investigation,
Computer Associates sent an employee to Platinum’s Illinois headquarters to
review customer contracts and conduct, "other activities related to the
management of Platinum." The department is seeking a civil penalty of $1.3

Computer Associates said the restrictions cited by the government were
identical to provisions in earlier Computer Associates acquisitions and insisted
the company "did not exercise beneficial ownership or operational control
over Platinum during the (regulatory) waiting period." "Those
provisions contained reasonable covenants concerning Platinum’s operations,
which were needed to protect Platinum’s business during the waiting period, …
" the company said in a prepared statement. The Justice Department approved
Computer Associates’ $3.5 billion acquisition of Platinum in May 1999 after the
company agreed to divest six Platinum mainframe systems management software

(C) Reuters Limited 2001.

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