There was laughter at a Capitol Hill reception last month when Bobby R. Inman, newly appointed chairman of Microelectronics and Computer Technology Corp. (MCC), remarked that his lawyer had advised him not to take the job.
But Inman wasn't really joking. MCC is a research and development organization established, financed and controlled as a joint venture by 12 of the largest electronics and computer companies in the nation. What worried Inman's lawyer was MCC's status under the antitrust laws.
It isn't just Inman's personal advisers who are examining the antitrust implications of MCC. Formation of the research venture has touched off a wide-ranging debate over the relationship between antitrust regulations and the competitiveness of American industry, and a move is afoot in Congress to give corporations more freedom to work together.
A National Academy of Sciences panel on "International Competition in Advanced Technology" reported last month that this nation's antitrust policy "fails to give sufficient weight to international trade considerations."
Antitrust restrictions, the report said, tend to inhibit "a range of activities that may benefit innovation and trade, such as pooling research efforts, pooling information on the work of international competitors, or pooling development programs whose costs are too large for any one firm in an industry to undertake."
The report, written by a group of eminent scholars, scientists and business executives, questioned whether the United States can afford to retain its traditional antitrust restrictions in the face of competition from nations such as Japan and France that operate under different rules.
The belief that cooperation is necessary to make the best use of the nation's intellectual resources and to avoid wasteful duplication of research efforts underlay the creation of MCC, brainchild of Control Data Corp. Chairman William C. Norris.
Assistant Attorney General William F. Baxter, head of the Justice Department's antitrust division, notified MCC in December that Justice "does not intend to challenge the formation of the new venture." But Baxter said this decision "must not be construed as advance approval of all its future activities."
Inman, a retired admiral and former deputy director of the Central Intelligence Agency, said he viewed this as an "amber light," allowing MCC to "proceed with caution." Now Congress, with Justice Department encouragement, has begun working on several bills that would turn the amber light to green by shielding joint research ventures from antitrust litigation.
By lifting the threat of antitrust proceedings--and the treble damages automatically assessed against corporations found guilty of antitrust violations--these measures would encourage corporations that are otherwise competing with each other to pool their capital and their talent to cooperate on long-range research projects.
"We're not talking here about price-fixing or sinister conspiracies," said Rep. Ron Wyden (D-Ore.), cosponsor of one of the bills. "We are instead talking about economic survival in an increasingly technical and increasingly competitive world."
The bill, sponsored by Wyden and three other house members, would permit corporations in any industry to engage in joint research ventures provided they adhered to certain guidelines, such as opening the venture to any company wishing to participate, and making any process or product developed by the venture available to nonparticipants within three years. An identical bill is being sponsored in the Senate by Sens. Charles McC. Mathias (R-Md.) and Gary Hart (D-Colo.)
Bills sponsored by Sen. Paul Tsongas (D-Mass.) and Rep. Don Edwards (D-Calif.) would require advance certification from the Justice Department to immunize the joint ventures from antitrust proceedings. A similar involves massive, long-term projects described by Control Data's Norris as "a broad base of fundamental technologies." Among them is a 10-year program to develop advanced computer architecture and so-called "artificial intelligence."
MCC is in business, and plans to proceed whether the antitrust rules are amended or not, its founders say. But Norris said the risk of antitrust litigation discourages others from following the same course. graphics/1 photo: William C. Norris. measure is expected to be introduced later this month by Sen. John Glenn (D-Ohio).
Though none of the bills has even been scheduled for public hearings, lobbying by supporters and opponents has already begun.
The most visible proponents are the National Association of Manufacturers, the National Machine Tool Builders Association, and the 12 electronic and computer companies that sponsored MCC--including Control Data and such giants as Honeywell Inc., Motorola Corp. and RCA Corp.
The Justice Department has not taken a formal position on any pending bill, but as part of a package of proposed revisions of the antitrust laws that Baxter has been circulating among members of Congress, the department endorsed immunity for joint ventures at least in principle.
Little overt opposition to the proposed antitrust immunity has surfaced in Congress. Key staff members, however, are privately questioning whether it is necessary to provide this incentive for giant corporations that presumably have enough resources of their own to finance research projects.
Wyden said in an interview that the purpose of his bill is to encourage the "pure research," but in fact everybody involved in the debate acknowledges that the research agenda of the joint ventures would be set by the sponsoring corporations, whose aim is to make money.
"They are not going to be looking into why the sun comes up in the morning or why the earth is round," said Steven Olson, assistant general counsel of Control Data. "Whatever they are doing has to have a commercial application." But he argued that the sponsoring companies would cooperate only in the research, not in manufacturing or marketing of any products or processes that might result. "After the base technology is developed, this should stimulate competition," he said.
The most vocal foe of MCC and of the legislation that would lift the antitrust cloud from the venture is Joseph Alioto Jr., of San Francisco, a prominent antitrust lawyer.
Alioto said that when he heard about the formation of MCC, "I wrote to all the companies and I told them that in my opinion the new corporation was a clear and unequivocal violation of the antitrust laws and so far as I knew they had no immunity to engage in this activity. I was stunned that they were able to open up lines of communication between themselves to even discuss this, much less reach an agreement to form an independent company."
Alioto wrote to sponsors of the legislation urging them to withdraw it because, he said, "it would permit these people to get together to form a cartel on research and development in the electronics industry. It's wrong, and it would be outrageous . . . these big companies have investments in old technology to protect, and this wipes out any competitive impetus."
Supporters of the legislation dismiss these arguments as special pleading by the antitrust bar, which stands to lose business if the antitrust laws are relaxed. But doubts about the effectiveness of the proposed measures reach into the very industries the bills are intended to help.
"I think it's doomed to fail," said David Locton, chairman of Dataspeed Inc., a Burlingame, Calif., company working on high-speed data transmission. "If I could call up some rival company and say let's get together, we could do a jiffy job on such and such a process. But in joint ventures, you're asking to change human nature. The competitiveness of the companies is such, the guys working in the venture will go running back to their home companies if they come up with anything."
Robert H. Swanson, president of Linear Technology Co., a California producer of linear integrated circuits, said, "in my end of the business, it's not clear that a big consortium would help. The atmosphere here calls for individual competition, and it might not be best fostered by this big venture in the sky. They're talking big projects, but I don't see that my company would benefit."
At MCC, however, the research agenda involves massive, long-term projects described by Control Data's Norris as "a broad base of fundamental technologies." Among them is a 10-year program to develop advanced computer architecture and so-called "artificail interlligence."
MCC is in business, and plans to proceed whether the antitrust rules are amended or not, its founders say. But Norris said the risk of antitrust litigation discourages others from following the same course.