ORAL ARGUMENT SCHEDULED FOR MAY 19, 1998

No. 97-5183

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

UNITED STATES OF AMERICA, ET AL.,

Plaintiffs-Appellees,

v.

THOMSON CORP., ET AL.

Defendants-Appellees,

HYPERLAW, INC.,

Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

BRIEF FOR APPELLEE UNITED STATES OF AMERICA

(FINAL COPY)

JOEL I. KLEIN

Assistant Attorney General

DONNA E. PATTERSON

Deputy Assistant Attorney General

CRAIG W. CONRATH	ROBERT B. NICHOLSON

JAMES K. FOSTER, JR.	JOHN P. FONTE

Attorneys	Attorneys

Department of Justice	Department of Justice

1401 H Street, N.W. 601 D Street, N.W.

Suite 4000	Room 10535

Washington, D.C. 20530 Washington, D.C. 20530

(202) 514-2435

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

A. Parties and Amici.

All parties, intervenors, and amici appearing before the district court and in this Court are listed in the Brief for Appellant, HyperLaw, Inc.

B. Rulings Under Review

References to the rulings at issue appear in the Brief for Appellant, HyperLaw, Inc.

C. Related Cases

This case was heard in the United States District Court for the District of Columbia, in Docket No. 96-1415. Notices of appeal from that action were filed in this Court in Nos. 96-5309, 97-5062 and 97-5070. All three appeals were voluntarily dismissed by the appellants. Additionally, HyperLaw filed a notice of appeal from the December 23, 1996 district court's order which was docketed in this Court as No. 97-5063. This Court dismissed that appeal as moot on October 23, 1997. The "appeals now before the United States Court of Appeals for the Second Circuit," mentioned in appellant's certificate as to related cases, are not related to this case. Those appeals are from declaratory judgment actions concerning West Publishing Company copyright claims, and do not involve issues similar to those presented in this appeal.

TABLE OF CONTENTS

CERTIFICATE AS TO PARTIES, RULINGS AND RELATED CASES	i

TABLE OF AUTHORITIES	iii

GLOSSARY	v

STATEMENT OF JURISDICTION	1

STATUTORY PROVISIONS	2

STATEMENT OF ISSUES	2

STATEMENT OF THE CASE	2

A. Proceedings In The District Court	2

B. Statement of Facts	4

1. Background To The Transaction	4

2. The Proposed Consent Decree	7

3. The District Court's Decisions	10

SUMMARY OF ARGUMENT	14

ARGUMENT	15

I.	STANDARDS OF REVIEW	15

II.	THE DISTRICT COURT'S FINDING THAT THERE ARE NO "DETERMINATIVE DOCUMENTS" WITHIN THE MEANING OF THE TUNNEY ACT IS NOT CLEARLY ERRONEOUS	16

III.	THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY NOT REQUIRING A SECOND ROUND OF NOTICE AND COMMENT	21

CONCLUSION	27

WORD COUNT CERTIFICATE	28

CERTIFICATE OF SERVICE	28

ORAL ARGUMENT SCHEDULED FOR MAY 19, 1998

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 97-5183

UNITED STATES OF AMERICA, ET AL.,

Plaintiffs-Appellees,

v.

THOMSON CORP., ET AL.

Defendants-Appellees,

HYPERLAW, INC.,

Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

BRIEF FOR APPELLEE UNITED STATES OF AMERICA

STATEMENT OF JURISDICTION

The district court had jurisdiction to enjoin the subject acquisition under 15 U.S.C. §§ 4 & 8 and 28 U.S.C. §§ 1331 & 1337. This Court has jurisdiction to review the district court's final judgment under 15 U.S.C. § 29(a) and 28 U.S.C. §§ 1291 & 1294. Final judgment was entered on March 7, 1997, and, after the district court granted an extension of time within which to file a notice of appeal from that final judgment, the notice of appeal was timely filed on July 9, 1997. (Doc. 136). See infra note 4.

STATUTORY PROVISIONS

All applicable statutes, etc., are contained in the Brief for Appellant, HyperLaw, Inc.

STATEMENT OF ISSUES

1. Whether the district court clearly erred when it found that there were no determinative documents within the meaning of the Tunney Act in this antitrust consent decree proceeding.

2. Whether the district court abused its discretion when it determined that additional public notice and comment was not needed for it to make its public interest determination.

STATEMENT OF THE CASE

A. Proceedings In The District Court

On June 19, 1996, the United States of America and the states of California, Connecticut, Illinois, Massachusetts, New York, Washington and Wisconsin ("plaintiffs"), filed a complaint challenging the proposed acquisition of West Publishing Company ("West") by the Thomson Corporation ("Thomson") as a violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 1 of the Sherman Act, 15 U.S.C. § 1. (Doc. 1; J.A. 123). The complaint sought permanent injunctive relief. Simultaneously, the plaintiffs filed, pursuant to the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. § 16(b)-(h), a proposed consent decree to settle the case. (Doc. 3 Attachment; J.A. 591). On July 5, 1996, the United States published the proposed decree and a competitive impact statement ("CIS") in the Federal Register. See 61 Fed. Reg. 35,250 (1996).

Comments were received from 26 parties, to which the plaintiffs filed a response, including amendments to the proposed decree, on September 23, 1996. (Doc. 43; J.A. 625). On September 30, 1996, the district court heard oral argument from the plaintiffs, from Thomson and West, and from amicus curiae Lexis-Nexis. The district court also received amicus briefs from appellant, HyperLaw, Inc. (Doc. 49), and Lexis-Nexis. On October 23, 1996, the plaintiffs moved for entry of the revised proposed consent decree as a final judgment. (Doc. 58; J.A. 709).

On December 23, 1996, the court entered an opinion and order finding all aspects of the proposed decree to be in the public interest except for one, and on that basis it denied the plaintiffs' motion for entry of a final judgment. (Docs. 77 & 78). It pointed out, however, how it believed the defects could be remedied, and invited submission of a revised decree. 949 F. Supp. at 931-32. A revised decree was submitted on February 4, 1997 (Doc. 99), but was again denied by order and opinion filed on February 27, 1997. (Docs. 116 & 117; J.A. 73). This time the court pointed out additional minor defects that had to be corrected before it would enter a final

judgment. In that order the court also granted HyperLaw's motion to intervene for purposes of appeal. On March 7, 1997, after the parties submitted another revised consent decree, the court entered the revised decree as a final judgment. (Doc. 126; J.A. 87). This appeal followed.

B. Statement of Facts

1. Background To The Transaction

West was the largest publisher of legal research materials in the United States -- notably of court decisions contained in its National Reporter System. (Doc. 6 p. 5; J.A. 159). Thomson, a Canadian corporation, also was a very large publisher of legal research materials in the United States. (Id. at 4-5; J.A. 158- 59). On February 25, 1996, Thomson agreed to purchase West for approximately $3.42 billion in cash. (Id. at 5; J.A. 159).

The plaintiffs in their antitrust complaint alleged that the proposed acquisition would significantly reduce competition in several specific product markets in three major categories: 1) print and/or CD-ROM sales of nine "enhanced primary law" products (i.e., annotated caselaw or statutes); 2) print and/or CD-ROM sales of 47 "secondary law" products (i.e., federal or state procedure manuals, law treatises, practice guides, etc.); and 3) the provision of comprehensive online legal research services. (Doc. 1 pp. 8-20; J.A. 130-42). The complaint explained that Thomson and West were the strongest publishers in the nine enhanced primary law product markets, and were either the only two or two of only a few publishers in the 47 secondary law product markets. (Doc. 1 p. 3; J.A. 125). Additionally, West claimed copyright infringement when a rival used what is commonly referred to as "star pagination" -- the insertion of an asterisk or other symbol in the text of a decision to indicate internal page breaks in West's National Reporter System, and the placement nearby of the West reporter's page number. (Id. at 12; J.A. 134). West had granted few, if any, licenses to employ star pagination to anyone other than Lexis-Nexis. (Id.). Because courts usually require citations to the National Reporter System,

the complaint alleged that West's copyright claim chilled entry into the primary and secondary law markets charged in the complaint because new entrants could not offer products using star pagination without the threat of copyright infringement litigation. (Id.).

Finally, the complaint explained that Lexis-Nexis and Westlaw are the nation's two largest comprehensive online legal research services -- electronic databases that allow users to search for and find relevant portions of primary and secondary law materials. (Doc. 1 p. 16; J.A. 138). West places its own primary and secondary law products on Westlaw. (Id. at 18; J.A. 140). Lexis-Nexis places its own and third parties' material on its service, including some Thomson primary and secondary law products such as United States Code Service and its annotated statutes for California, New York, Massachusetts and Michigan. (Id.). Thomson also licensed to Lexis-Nexis its Auto-Cite electronic citator service that is used to gather case history and negative commentary for a case. The complaint alleged that the acquisition would increase Thomson's incentive to raise prices for, reduce quality and innovation of, or withhold access to, some of the products it was licensing to Lexis-Nexis. (Id. at 19; J.A. 141).

2. The Proposed Consent Decree

Simultaneously with filing the complaint, the plaintiffs filed a proposed consent decree to remedy the violations charged in the complaint. The proposed decree required Thomson to divest its U.S. Reports Lawyers' Edition, its enhanced statutory law products, and one secondary law product in each of the relevant secondary law markets. (Doc. 3 Attachment p. 6; J.A. 596). It further required Thomson to divest its Auto-Cite product, and to permit the states of California, Washington and Wisconsin to reopen bidding of their contracts to publish the official state reporters, thus allowing those states to cause a divestiture of the state reporter products and related assets if they so chose. (Id. at 6, 17; J.A. 596, 607). The purchasers of divested products would receive all production assets of the products, including intellectual property and work in progress, to allow those products to remain viable. (Id. at 3-4; J.A. 593-94). The decree also required Thomson to license the use of star pagination in the National Reporter System to other legal publishers (id. at 15-16; J.A. 605-06), and set forth a model license agreement with a fee schedule. (Id. at Exhibit B; J.A. 615). That agreement contained a provision that required the licensee to give up its right to challenge West's copyright claim. (J.A. 619).

The proposed decree did not prohibit the defendants from consummating their transaction. Rather, it required them to hold the divestiture products separate and to maintain those products as ongoing and viable assets until divestiture was completed. (Doc. 3 Attachment pp. 14-15; J.A. 604-05). Additionally, through a stipulated order which the court signed on June 19, 1996, the defendants agreed to abide by the terms of the proposed decree as though the decree was in effect. (Doc. 3 p. 2; J.A. 585). Thus, although the defendants consummated the acquisition on June 20, 1996, the divestiture products were at all times held separate.

The proposed consent decree and CIS were published in the Federal Register on July 5, 1996. Among other things, the CIS explained that there were no "determinative materials or documents" within the meaning of the Tunney Act, 15 U.S.C. § 16(b), that were considered by the United States in formulating the proposed decree. (Doc. 6 p. 24; J.A. 178). The public then had 60 days in which to comment. See 15 U.S.C. § 16(b). The plaintiffs received comments from 26 parties. On September 23, 1996, the plaintiffs filed with the court their response to the public comments, along with a copy of each of the comments received. (Doc. 43; J.A. 625). In response to the comments, the parties agreed to lower the star pagination license fee. They also clarified that neither Thomson nor West would use the existence of the star pagination license agreement to support West's copyright claim, that the license fee need only be paid by the publisher and not by third party information providers, and that the license fee for books was payable only in the year printed. (Doc. 43 pp. 35, 40, 50-51, 52; J.A. 663, 668, 678-79, 680). Additionally, at the September 30, 1996 hearing, in response to concerns voiced by the court, Thomson agreed to eliminate the license provision that prohibited licensees from challenging West's copyright claim (Tr. 41-42, 84; J.A. 798-99, 841).

In its amicus brief filed October 18, 1996, HyperLaw argued, among other things, that the government failed to make available "determinative documents" within the meaning of the Tunney Act. It claimed that those documents included, at the very least, "secret 1988 agreements between West and Lexis-Nexis," and the 1996 license extension agreement between Thomson and Lexis. (Doc. 49 pp. 4, 9-10 & n.8). It further argued,

by reference to "HyperLaw's letter to DOJ dated October 10, 1996 (HyperLaw Exhibit J)," that the government was required to republish for public comment the revised proposed consent decree. (Id. at 3). On October 23, 1996, the plaintiffs filed their response to HyperLaw's amicus brief reiterating that there were no determinative documents, and explaining why the modifications to the proposed decree did not require republication. (Doc. 57).

Also on October 23, 1996, the plaintiffs moved for entry of a revised consent decree. (Doc. 58; J.A. 709). In addition to the changes noted above, and in response to a supplemental brief filed by Lexis-Nexis (Doc. 65), the submitted proposed decree clarified: 1) that Thomson would not prohibit buyers of divestiture products from cross-citing to Thomson products; 2) that Thomson's assignment of its Auto-Cite agreement with Lexis- Nexis as part of the divestiture of Auto-Cite would be only "if permitted by contract;" and 3) that the Auto-Cite database to be divested was sublicensable. (Doc. 58 at 2; J.A. 710).

3. The District Court's Decisions

On December 23, 1996, the court issued a lengthy opinion and order finding all aspects of the proposed consent decree in the public interest except for the star pagination license agreement. The court first found that the plaintiffs had fully

complied with all procedural requirements of the Tunney Act. The court specifically rejected HyperLaw's claims that the government should be required to disclose additional documents and that the court could not approve the revised decree until it was published in the Federal Register, finding "nothing in the statute or in the case law" to support HyperLaw's claims. 949 F. Supp. at 915 n.7.

The court then evaluated whether the divestitures required by the proposed decree would remedy the violations charged in the complaint. The court found that the decree's hold-separate safeguards, in conjunction with the degree of assets to be divested and a buyer's ability to hire Thomson/West employees, demonstrated that "the divested products will attract strong, capable buyers who will be able to ensure the viability of the [divestiture] products." 949 F. Supp. at 915-16. The court also found that the divestiture products had sufficient brand recognition, and that the purchasers of those products would be able to continue cross-referencing other Thomson products. Id. at 916-17. Thus, the court "conclude[d] that the Proposed Final Judgment adequately ensures the viability of the divested Thomson products, thereby curing the specific allegations in the complaint." Id. at 918. For the same reasons, the court also found that the specific divestitures required by the proposed decree, including Supreme Court Reports Lawyers Edition and Auto- Cite, cured the offense charged in the complaint in the comprehensive online legal research services

product market. Id. at 921-24.

The court then addressed West's copyright claim and the star pagination license agreement. The court expressed "serious doubts" about the merits of West's claim. 949 F. Supp. at 925- 26. It then noted that "the consent decree does legitimize Thomson/West's ability to profit from the licenses for use of star pagination while the issue is litigated in the Second and Eighth Circuits." Id. at 926. It concluded that "[t]hat fact alone is troublesome in view of the weakness of West's claim." Id. Although the court found the mandatory nature of the license agreement in the public interest, since it gave publishers protection from litigation by Thomson and West (id. at 928-29), it found that the fees to be paid by a licensee would "maintain[] by court order significant barriers to entry into the relevant markets identified in the complaint." Id. at 929. Thus, the court found that the "license agreement and fee schedule do not effectively remedy the anticompetitive effects of the merger alleged in the complaint." Id. The court then "suggest[ed] that the public interest would be served if West and Thomson would agree to amend the license provisions . . . to provide a free license" until West's copyright claim is judicially resolved. Id. at 930. And, although it denied entry of the decree, the court invited the parties to "submit a revised Proposed Final Judgment with an appropriate motion at their earliest convenience." Id. at 931-32.

On January 26, 1997, Thomson agreed to sell all of the divestiture products to Lexis-Nexis. (Doc. 98). Subsequently, on February 4, 1997, the defendants submitted a revision to the proposed decree, which the plaintiffs supported, addressing the license fee issue raised in the court's December opinion. (Doc. 99). The revision provided that for any publishing company with net sales of less than $25 million per year, all license fees would be deferred until either "a final judicial determination" of West's copyright claim had been made, or December 31, 2000, whichever came first. If no final judicial determination had been made by December 31, 2000, licensees would start paying prospectively according to the fee schedule, but the fees accrued to that point would continue in abeyance. Deferred fees would become payable 30 days after West's copyright claim was upheld. (Id.). Also on February 4, 1997, HyperLaw moved to intervene for purposes of appeal. (Docs. 100 & 106; J.A. 506, 531).

On February 27, 1997, the court entered an opinion and order addressing these matters. (Docs. 116 & 117). First, the court concluded that the proposed sale of all divestiture products to one buyer rather than several did not alter its

previous findings concerning "the soundness of the divestiture process and the sufficiency of the divestiture package." (Doc. 116 pp. 3-5; J.A. 75-77). It then addressed the revision to the license agreement and noted that a minor change was needed to clarify that a "final judicial determination" was a Supreme Court decision on the merits. (Id. at 8-9; J.A. 80-81). Finally, it granted HyperLaw's motion to intervene for purposes of appeal. (Id. at 10-11; J.A. 82-83). After the license agreement was so clarified, the court entered the amended proposed consent decree as Final Judgment on March 7, 1997. (Doc. 126; J.A. 87). Subsequently, the plaintiffs approved the sale of the divestiture products to Lexis-Nexis, and the sale was completed on March 31, 1997.

SUMMARY OF ARGUMENT

The district court's finding that none of the four document's singled out by HyperLaw are "determinative documents" within the meaning of the Tunney Act is not clearly erroneous. As this Court recently explained, a determinative document is one that had a significant impact on the government's formulation of the proposed decree. Since two of the documents at issue did not even exist when the consent decree was drafted, they could not have been instrumental in that drafting. And HyperLaw offers no evidence to show that the other two documents it seeks played a role in the decree's formulation. Indeed, HyperLaw's evidence proves the exact opposite.

Additionally, the district court did not abuse its discretion by not requiring a second round of public comments in this case. The few modifications that were made to the original proposed decree were a "logical outgrowth" of that proposal. Indeed, none of the changes were contrary to HyperLaw's or the public's interests, and the only substantive changes involved the star pagination license, not the divestiture provisions of which HyperLaw complains. Because the divestiture provisions in the original proposal were not modified during the course of the proceeding, those provisions were necessarily subject to full notice and comment.

ARGUMENT

I.	STANDARDS OF REVIEW

1. In United States v. Western Electric Co., 993 F.2d 1572 (D.C. Cir.), cert. denied, 510 U.S. 984 (1993), this Court left unresolved whether the district court's underlying findings in a Tunney Act case, which if improper could constitute abuse of discretion, are reviewed under the "clearly erroneous" standard or are reviewed de novo. See 993 F.2d at 1577-78 (citing Fed. R. Civ. P. 52 but analogizing Tunney Act appellate review to review of district court's application of substantial evidence standard in reviewing an agency decision). In either case, the government's determinations are due substantial deference. Id. We believe that the court's finding that the government was correct that there are no determinative documents in this case

should be reviewed under the clearly erroneous standard.

2. We are not aware of any decision setting forth the standard for reviewing a Tunney Act district court's determination that an additional round of notice and comment is not required for it to make its "public interest" finding. Because the court enjoys broad discretion in controlling the evidence gathering in these cases, see infra pp. 21-22, we believe that its decision in this regard should be reviewed for an abuse of discretion.

II.	THE DISTRICT COURT'S FINDING THAT THERE ARE NO "DETERMINATIVE DOCUMENTS" WITHIN THE MEANING OF THE TUNNEY ACT IS NOT CLEARLY ERRONEOUS

The Tunney Act's notice and comment provision requires the government to make available to the public copies of the proposed consent decree, and "any other materials and documents which the United States considered determinative in formulating such proposal." 15 U.S.C. § 16(b). In its CIS, the government certified that there were no determinative documents. (Doc. 6 p. 24; J.A. 178). And although HyperLaw claimed that there were such documents, citing Section 16(b), the district court agreed with the government. See 949 F. Supp. at 915 n.7.

Nonetheless, HyperLaw's primary argument (Br. passim) is that the district court erred when it held that the Tunney Act did not require production of any documents in this case. HyperLaw argues that there are four determinative documents that the government failed to produce: 1) the 1988 settlement

agreement between West and Mead Data; 2) the March 1996 agreement that extended Lexis-Nexis' licenses for Thomson content included on its service; 3) the January 1997 Thomson/Lexis- Nexis sales agreement for the divestiture products; and 4) the mutual release that was part of that sales agreement. See HyperLaw Br. at 22 n.9. HyperLaw's claim borders on the frivolous.

Just seven months ago, in Massachusetts School of Law of Andover v. United States, 118 F.3d 776 (D.C. Cir. 1997) ("MSL"), this Court held that Section 16(b)'s statutory language and legislative history lead to the conclusion that the term "determinative documents" encompasses "only . . . documents, such as reports to the government, that individually had a significant impact on the government's formulation of relief -- i.e., on its decision to propose or accept a particular settlement. " 118 F.3d at 784 (quoting Gov't's Br.) The Court gave as an example of a determinative document the "Ramsden memorandum" that formed the basis for the government's decision not to require ITT to divest the then recently acquired

Hartford Fire Insurance Company. Id.

HyperLaw, which omits any reference to MSL, does not come close to showing that the documents it claims are determinative "individually had a significant impact on the government's formulation of relief." 118 F.3d at 784. Neither the 1997 West/Lexis-Nexis sales agreement for the divestiture products, nor the mutual release attached to it, could have been determinative in government formulation of the proposed final judgment in 1996, because neither the agreement nor the release then existed. Nor does HyperLaw give any remotely persuasive

explanation why the March 1996 Thomson/Lexis-Nexis agreement, that merely extended existing licenses for 5 years, would have been determinative in formulating the decree.

HyperLaw is thus left with arguing that the government must have considered the 1988 settlement agreement between West and Mead Data a determinative document because, allegedly, "the Government's own papers" "constantly" and "repeatedly" refer to that settlement agreement. (Br. 12, 17 n.5, 18, 20, 25 n.12, 29, 30). But the record is clear that no government "papers" refer to this 1988 agreement. Thus, although HyperLaw claims that it "described the many references to these 1988 agreements made in connection to the proposed consent decree" in its counsel's October 10, 1996 letter to the Department of Justice (Br. 20-21 & n.8), neither its brief nor that October 1996 letter provides one citation to any government document that makes reference to the 1988 agreement. Indeed, no such government document exists. Thus, HyperLaw's claim that "the Justice Department . . . repeatedly refer[ed] to central, critical, and finally determinative documents in virtually

every pleading filed" (Br. 30) (emphasis in original) is totally baseless.

Moreover, HyperLaw's claim, that "[a]ccording to the Government's own papers, these documents were used in its negotiation of the [star pagination] License Agreement" (Br. 18), is totally refuted by the very "evidence" upon which it does rely. Thus, on page 14 of its brief, HyperLaw quotes at length from an article in the September 1996 issue of The American Lawyer titled How West Was Won. That article, in turn, quotes "West's chief lawyer" as explaining that the proposed star pagination license agreement "is not analogous at all to the [1988] Lexis agreement with West -- [it is] different in almost every way -- and thus determining what Lexis might or might not save [by switching from its existing agreement to the proposed license agreement] is a very difficult calculation. " (Br. at 14) (second alteration in Br.). It is hard to imagine how a document that is "not analogous at all" and "different in almost every way" from the proposed license agreement was determinative in the formulation of that agreement.

In short, none of the four documents HyperLaw seeks

" individually had a significant impact on the government's formulation of relief. " MSL, 118 F.3d at 784. Indeed, none of those documents even constitutes a " smoking gun[] or the exculpatory opposite." Id. Thus, the district court correctly held that the government was correct that they were not determinative documents within the meaning of the Tunney Act.

III.	THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY NOT REQUIRING A SECOND ROUND OF NOTICE AND COMMENT

The government, in conformance with the Tunney Act (15 U.S.C. § 16(b)), published both the proposed decree and the CIS in the Federal Register. 61 Fed. Reg. 35,250 (1996). After receiving public comments, and again in conformance with Section 16(b), the government published the comments and its response to them. 61 Fed. Reg. 53,386 (1996). In the district court, HyperLaw nonetheless argued that because the parties had made certain modifications in response to the public comments, additional notice and comment was required. (Doc. 49). The district court disagreed, finding "nothing in the statute or in the caselaw that requires . . . further publication and opportunity to comment." 949 F. Supp. at 915 n.7. HyperLaw's claim that the court erred is meritless.

In a Tunney Act proceeding, the role of the district court is to determine if the proposed consent decree is "in the public interest." 15 U.S.C. § 16(e). As the legislative history explains, the statute's "procedural" requirements -- government preparation of a CIS and participation in a notice and comment proceeding -- are intended "to assist the court in making that

determination." S. Rep. No. 93-298, at 4-5 (1973); accord H.R. Rep. No. 93-1463, at 21 (1974) (comments of Rep. Hutchinson) (the statutory requirement that "the Department of Justice . . . publish a competitive impact statement in the Federal Register and receive public comment . . . is to enable a court to determine whether a proposed consent decree is in the public interest "), quoted in Alex. Brown & Sons, 169 F.R.D. at 541. Moreover, Congress "anticipated that the trial judge will adduce the necessary information through the least complicated and least time-consuming means possible." S. Rep. No. 93-298 at 6. Indeed, Congress fully intended that the court would enjoy broad discretion in how it chose to obtain the necessary information. Id. at 7.

Thus, Tunney Act notice and comment is analogous to agency rulemaking notice and comment. Both are intended to inform the decisionmaker of the pros and cons of the proposed action. And in the agency rulemaking context, the law is well settled that additional notice and comment is required only rarely. In

Omnipoint Corp. v. FCC, 78 F.3d 620 (D.C. Cir. 1996), this Court explained that whether a second round of comment is required depends on " whether the final rule promulgated by the agency is a "logical outgrowth" of the proposed rule. " 78 F.3d at 631 (quoting American Water Works Ass'n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1994)). The Court further explained that an agency "act[s] well within its authority" when it chooses to modify a proposed rule "based on comments responding to the [notice of proposed rulemaking]." 78 F.3d at 632. In fact, "[i]n most cases, if [after publishing notice] the agency then alters its course in response to the comments it receives, little purpose would be served by a second round of comment." American Water Works, 40 F.3d at 1274 (emphasis added). Rather, "a new round of notice and comment" is required only if it "would provide the first opportunity" for the public to comment on the proposed rule. Id.

The same rule could well apply in Tunney Act proceedings. Cf. United States v. American Telephone & Tel. Co., 552 F. Supp. 131, 144-45 (D.D.C. 1982) ("AT&T")(suggesting without deciding that notice and comment would be required if "a major modification" were made to an existing consent decree), aff'd, 460 U.S. 1001 (1983). And it is clear that the judgment

submitted for approval in October 1996 after notice and comment (Doc. 58), and generally approved by the court in December 1996, was a "logical outgrowth" of the original proposed decree. Omnipoint Corp., 78 F.3d at 631. It contained only two substantive changes to the original proposed decree -- both concerning star pagination licensing, and both in response either to the public comments or the court's expressed concerns. First, at the September 30, 1996 hearing, in response to concerns voiced by the court, Thomson agreed to eliminate the provision requiring a star pagination licensee to give up its right to challenge West's copyright claim (Tr. 41-42, 84; J.A. 798-99, 841). Second, in response to "many comments on the level of the pagination fees," the parties agreed to lower those fees (Doc. 43 pp. 39-40; J.A. 667-68).

The only other changes to the original proposed decree were the addition of language to clarify: 1) that Thomson would not use the star pagination license to support West's copyright

claim; 2) that the license fee need only be paid by the publisher; 3) that the license fee for books was payable only in the year printed; 4) that Thomson would not prohibit buyers of divestiture products from cross-citing to Thomson products; 5) that Thomson's divestiture of Auto-Cite would not violate its contract with Lexis-Nexis; and 6) that the divested Auto-Cite database would be sublicensable. (Doc. 43 pp. 35, 50-52; Doc. 58 p. 2; J.A. 663, 678-80, 710).

All of the modifications were a natural outgrowth of the notice and comment process. Taken separately or together, the nine of them do not fundamentally change the original proposed decree. All either benefited HyperLaw and contributed to the public interest, or had no adverse effect on them. Thus, additional notice and comment was not required. Omnipoint Corp., supra; American Water Works, supra.

Indeed, HyperLaw can not explain why any of the specific modifications that the parties made to the decree required additional comment. Rather, quoting its February 1997 motion to intervene for purposes of appeal, HyperLaw shifts its focus from the text of the decree to the actual carrying out of the decree. Thus, it claims that "the final transaction [Thomson's purchase of West and sale of the divestiture products to Lexis-Nexis] . . . is going to be substantially different than the original proposed decree of June, 1996." (Br. 25) (first emphasis added). Apparently, HyperLaw is implying that when

Thomson agreed to sell all the divestiture products to Lexis- Nexis, as opposed to other buyers, somehow this modified the decree and required further notice and comment.

In fact, however, on the issue of divestiture nothing in the decree changed. The decree as originally proposed in June 1996 and as ultimately entered by the court in March 1997 merely required Thomson to divest specifically identified legal products, and to obtain the government's approval of any intended sale. It did this to remedy the acquisition's anticompetitive overlap of specific Thomson and West legal products as charged in the complaint. The language of the decree never required nor prohibited the sale of the divestiture products to any particular entity. And since there was never any change to the decree in this respect, the original notice and comment were wholly sufficient. The district court, in rejecting HyperLaw's argument pressed here on appeal, correctly explained that the divestiture sale to Lexis-Nexis did not change the decree in any way; it merely carried it out (Doc. 116 pp. 4-5; J.A. 76-77):

[T]he Court has already decided that divestiture is an acceptable remedy for the anticompetitive effects of the Thomson/West merger and that the procedures set forth in the consent decree for accomplishing the divestiture are well designed to assure viability and competitiveness. The fact that all of the Divesture (sic) Products will be sold to Lexis-Nexis does not alter that conclusion . . . . [Thus], the Court sees no reason to alter its judgment that the divestiture as set forth in the consent decree, whether to one buyer or to many, is in the public interest.

In short, the district court did not abuse its discretion when it decided that it had sufficient information without additional notice and comment to make its public interest determination.

CONCLUSION

For the foregoing reasons, the judgment of the district court should be affirmed.

Respectfully submitted.

JOEL I. KLEIN

Assistant Attorney General

DONNA E. PATTERSON

Deputy Assistant Attorney General

CRAIG W. CONRATH ROBERT B. NICHOLSON

JAMES K. FOSTER, JR. JOHN P. FONTE

Attorneys Attorneys

Department of Justice Department of Justice

1401 H Street, N.W. 601 D Street, N.W.

Suite 4000 Room 10535

Washington, D.C. 20530 Washington, D.C. 20530

(202) 514-2435

CERTIFICATE REQUIRED BY CIRCUIT RULE 28(d)

I hereby certify that the foregoing Brief for Appellee United States of America contains no more than 12,500 words.

JOHN P. FONTE

Counsel of Record

CERTIFICATE OF SERVICE

I hereby certify that on March 27, 1998, I served the foregoing final form Brief for Appellee United States of America, by first-class mail, upon the following counsel of record:

Wayne D. Collins, Esquire Lorence L. Kessler, Esquire

Shearman & Sterling 1825 I Street, N.W. 599 Lexington Avenue Suite 400

New York, New York 10022 Washington, D.C. 20006

Paul J. Ruskin, Esquire

72-08 243rd Street

Douglaston, New York 11363

Carl J. Hartmann, Esquire

69 Sussex Street

Jersey City, New Jersey 07302

JOHN P. FONTE

Counsel of Record