United States v. Computer Associates International, Inc.

Computer Associates International, Inc. (CA) (defendant) was a leading provider of systems-management software products. On March 29, 1999, CA entered into a merger agreement with a competitor, Platinum technology International, inc. (Platinum) (defendant), pursuant to which CA would purchase all of Platinum’s outstanding stock in a $3.5 billion tender offer and Platinum would become CA’s wholly owned subsidiary. Following announcement of the transaction, CA and Platinum made the required pre-merger filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act). The Department of Justice (DOJ) reviewed the HSR Act filing and ultimately agreed to have the HSR Act waiting period expire on May 25, 1999 and allow the merger to consummate if CA agreed to sell certain Platinum products and assets to maintain a level of competition. CA and Platinum agreed to the DOJ’s terms, and the merger consummated. On September 28, 2001, the United States (US) (plaintiff) filed a civil antitrust lawsuit alleging that the merger violated the HSR Act because CA allegedly took control of Platinum’s operations and business during the HSR Act waiting period. The US alleged that the merger agreement contained a variety of pre-closing covenants (also known as interim covenants) that limited Platinum’s unilateral business decisions and allowed CA to control certain facets of Platinum’s business operations. For example, CA had the power to (1) review and accept or reject newly proposed customer contracts, (2) set pricing terms in customer contracts, (3) enter into consulting agreements, and (4) access and utilize Platinum’s confidential and competitive customer information. After filing the complaint and prior to the trial, the parties reached a settlement that provided that CA and Platinum would pay a fine of $638,000 for the HSR Act violation, and CA agreed to refrain from certain operational-control activities in any future acquisition transactions. The US filed a proposed final judgment and competitive impact statement to allow the court and public to evaluate the proposed settlement of the lawsuit and determine whether the settlement was in the public interest.