Sungard

SunGard’s victory reversed an 8-year unbroken record of success by the government in the

Federal Court in D.C.

By demonstrating the ability of consumers to perform disaster recovery internally and focusing on the dynamic nature of the market, SunGard was able to convince the court that the merger was unlikely to harm consumers.

Ultimately, the relevant market question

turned on where to appropriately limit the

market and what other forms of disaster recovery

were effectively in that market. The court ultimately

found that the DOJ did not meet its

burden of establishing that the relevant product

market was limited to shared hotsite services for

mainframe and mid-range computer processing

centers.

The two critical factors in this finding were

the dynamic nature of the market and diversity of

customers. The court observed that the market

included an

extremely heterogeneous group of customers,

particularly in terms of their needs and

computer equipment. Given the rapid

changes in computer capabilities and the

reduced cost of both hardware and communications,

the evidence does not permit the

exclusion of either internal hotsites or quickship

services from any market that includes

shared hotsites.4

Simply, it was difficult for the court, based on the

evidence before it, to determine that there was a

clear group of customers for whom internal or

quick-ship services were not a viable alternative

in response to a price increase for shared hotsite

services.

As the court observed: “[W]hat is

significant is not whether the companies that

currently use internal solutions have the capability

to enter the market as vendors for others, but

whether the customers that currently use shared

hotsites would switch to an internal hotsite in

response to a [small but significant increase in

price].”

By convincing the court to expedite

the discovery and trial, SunGard effectively

began to level the playing field with the government.

The...