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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (30480)	12/19/1999 7:05:00 PM
From: nihil	Read Replies (1) \| Respond to of 77400

No problemo. I was annoyed by your last line or so. You note the "maintain" part of the FTC discussion, and that is the point of Hand's decision in Alcoa. You can legally have a monopoly until you try to do something with it -- like sell something at a monopoly price, and that rings the bell. As to the realism of the problem, since anyone injured by a violation can sue and demand damages and an injunction, monopoly is never a hypothetical problem. It weakens a company's legal position terribly. Consider the current lawsuit in which Intel was sued by a customer whom it refused to furnish data on its product as a defensive measure when the customer sued Intel for infringing its IP. Many experts think that Intel is innocent and will eventually prevail, but it was ordered, initially, to furnish the customer the information it needed to compete (the "essential facility" argument). Moreover, Intel was subjected to another FTC review after being released a little more than a year ago without charges. Once you have to sign a consent decree to behave (as AT&T did in 1956) and Microsoft did a year or so ago, the Fed's can haul you up on contempt for a difference of opinion. That's what broke up AT&T in '82 and may crush MSFT very soon. The monopoly need not be nationwide to be -- it is merely in any market in any part of the country, and you don't need to have a huge percentage, the rule against mergers is to ban any combination that "tends to lessen competition or to create a monopoly." The merger ban is much more inclusive than the status fault and it is not criminal but civil and preventative. I'm not a lawyer either, but I have taught this stuff for years in Business Strategy courses. My primary purpose is to equip executives with information to avoid getting into illegal situations which adversely affect their businesses. I am surprised that so many big companies act as you said -- that legally acquired monopolies are legal. It may be, as you say, that a company may survive a challenge in a legally acquired monopoly, but my experience has been very different. Gates seemed to be sure that his monopoly was legally acquired, but he and his guys did not understand the interpretations of the law that held. I think Judge Jackson was wrong in some of his findings of fact, but, remember, he has to right in only one monopoly count, and he can bust MSFT up. I think Intel has been much cleverer and much more conformable to the law than MSFT, but they're in court all the time. For a monopolist, a patent is a dangerous possession. If they overreach at all in enforcing it, they have abused their monopolist position, and can be charged with Sherman Act violations as well as under the patent law for abuse (and they may lose their patent. Worst of all, lawyers cannot predict with precision what act will be held to be illegal under the antitrust laws. The penalties are so harsh for being wrong that good advice in all but clearcut cases is not to take a chance and to settle early if one is arguably a monopolist. Cisco is very smart and I think well managed. LU has a long history of antitrust abuse dating back to days as part of AT&T. 25 years ago I advised AT&T to emphasize the ARPANET. The guys in my lab had just put a network control program into UNIX and this made it possible to put minicomputers with 60 KB of memory and 20 or more terminals as hosts on the ARPANET. The AVPs I was working with did not even know that AT&T owned Unix. They didn't know who BBN was. They didn't care about data transmission as a part of the common-carrier communications business to which they were limited by the 56 consent decree. Later, AT&T accepted breakup as the price of "getting into computing" and modifying the consent decree. What's obvious is that AT&T and Nortel gave away the internet space to upstarts like Cisco. Surely part of the problem was fear of their violating what they understood as limitations imposed on them by antitrust law.