Antitrust Considerations Relating to the Distribution of Intangible Information Services

• Published date: 01 December 1985
• Author: Christopher W. Savage
• Date: 01 December 1985
• DOI: 10.1177/0003603X8503000403
• Subject Matter: Article

The Antitrust Bulletin/Winter 1985

Antitrust considerations relating

to the distribution

of

intangible information services

BY

CHRISTOPHER

W.

SAVAGE*

Introduction

873

The structure

of

the information/communications/data process-

ing industry is evolving rapidly. Increasingly, firms are developing

"information products" (such as databases and news services) to

be sold to end users in all segments of the economy. With the

ever-widening availability

of

both basic and sophisticated com-

puter and communications equipment, many firms are offering

services that extend beyond the mere transmission (or arranging

for the transmission)

of

information from one place to another.

Instead, these firms assemble, combine, and rearrange other

firms' data prior to or contemporaneous with communicating it,

in order to present it to users in a more useful form.

With increasing frequency, firms engaged in the collection and

dissemination

of

information are seeking legal advice regarding

how to structure their contractual arrangements with other firms

in the information industry so as to avoid or minimize antitrust

risk. For example, a firm providing communications services to a

preexisting group of end users may desire to offer those users

access to databases maintained by third parties, thereby increas-

ing the use

of

its communications services. Or, a firm which owns

• Member

of

the District

of

Columbia and California Bars.

874 The antitrust bulletin

adatabase may wish to engage a particular communications firm

to undertake marketing efforts in order to increase use

of

the

database. Contractual arrangements to allow these transactions

to go forward can be structured in a variety

of

ways. This article

discusses some

of

the antitrust considerations relevant to such

arrangements.

General antitrust considerations

The communications and data processing industries are no

strangers to antitrust litigation, as the dual behemoths

of

anti-

trust attest.' Even so, there has been little significant antitrust

litigation concerning the new and rapidly changing business

arrangements in the information industry per se. In particular,

there does not appear to be any generally accepted, coherent

framework for analyzing the distribution

of

information services

or products from their creators to their end users. Consequently,

counseling clients as to the appropriate structure

of

those ar-

rangements from an antitrust perspective has been somewhat

challenging. The purpose

of

this article is to

layout

such a

framework.

Business arrangements in this or any other industry are, of

course, analyzed under the rule

of

reason

of

section 1

of

the

Sherman

Act,'

under which the legality of a given practice is

determined by evaluating its procompetitive and anticompetitive

effects] within defined product and geographic markets.' The

1United States v. American Tel. &Tel.

Co.,

Civ.

No.

74-1698

(D.D.C.

filed Nov. 20, 1974); United States v.

International

Business

Machines

Corp.,

Civ. No. 69-200 (S.D.N.Y. filed

Jan.

17, 1969).

215

U.S.c.

§ 1 (1982).

The

rule

of

reason has been described as

"the

prevailing

standard

of

analysis."

See

Continental

T.V.,

Inc. v.

GTE

Sylvania

Inc.,

433 U.S. 36, 49 (1977) (Continental T. V.).

National

Soc'y

of

Professional Engineers v.

United

States, 435

U.S. 679 (1978) (Professional Engineers).

4

Gough

v.

Rossmoor

Corp.,

585 F.2d 381, 389 (9th Cir. 1978),

cert. denied, 440 U.S. 936 (1979).