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GE Settles Antitrust Suit

July 15, 1998

WASHINGTON (AP) _ General Electric Co. and the Justice Department have settled a 2-year-old antitrust lawsuit over the company’s medical equipment business, and the company agreed to sell some computer service business to head off a second planned suit.

GE agreed Tuesday to scrap rules it imposed on hospitals that used GE software in computerized medical equipment. The Justice Department sued the company in 1996, claiming GE illegally limited competition by forbidding more than 500 hospitals to compete with GE for equipment service contracts.

At the same time, the Justice Department decided to hold off on an antitrust challenge to GE’s proposed $16 million purchase of InnoServ Technologies Inc., which services medical imaging equipment. In return, GE agreed to sell Arlington, Texas-based InnoServ’s service software assets.

GE is the largest maker of medical imaging equipment such as CT scanners and magnetic resonance imagers, or MRIs. It also services its own and other makers’ equipment, competing with hospitals that maintain the equipment in-house, and with smaller service specialists.

The 1996 suit claimed GE strongarmed hospitals that license some GE imaging software. To get the software, the hospitals had to agree to stay out of the market for service business at other hospitals or clinics, the suit charged.

The Justice Department’s antitrust chief, Joel I. Klein, said the agreements will cut prices to hospitals and restore competition for medical equipment maintenance. GE said in a statement that the settlement is not an admission of guilt.

``The settlement agreement recognizes GE’s fundamental right to protect its intellectual property from misuse. The Justice Department agrees with that goal,″ the GE statement said.

Klein said GE indeed is within its rights to protect its software, but that the company went out of bounds in requiring such restrictive licensing agreements.

GE, based in Fairfield, Conn., signed a merger agreement with InnoServ in May that raised red flags at the Justice Department. A complaint filed as part of the settlement Tuesday alleges the merger as planned would likely ``lessen competition substantially and tend to create a monopoly″ because GE will have eliminated a competitor for equipment services.

If the Justice Department had gone ahead with the suit, it would have asked a judge to stop the merger.

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