GE wins round in federal lawsuit, but trade-restraint charge remains

Montana case examines vendor's service policies

GE Medical Systems is batting one for two in its defense of a Justice Department antitrust suit first brought against the company last August (SCAN 8/28/96). In March, the judge assigned to the case by the U.S. District Court of Montana threw out the charge of alleged conspiracy to monopolize trade, defined as a violation of the Sherman Act.

"We thought right from the beginning that (the charge) didn't have any merit," said Charles Young, a spokesperson for the Milwaukee company. "Clearly with the dismissal of that charge, it shows that the judge is weighing the circumstances and not judging us on anything other than the facts of the case."

GE still has far to go before the suit is resolved, however. The remaining charge-alleged restraint of trade in violation of the Sherman Antitrust Act-now appears headed for trial.

The roots of this allegation extend to the company's practice of offering advanced maintenance software to hospitals only if they agree not to use the software to compete for service contracts on GE imaging equipment at other hospitals. GE contends that the advanced software was developed specifically for GE engineers. As an added benefit, the package is made available to customers for in-house use. Should those hospitals wish to compete with GE in servicing equipment at other facilities, they have the option of using a standard software package or having service customers obtain their own advanced packages directly from GE.

The Justice Department lawsuit is asking the Montana district court to prohibit GE from restricting the use of its advanced software in its current manner and to prevent the company from enforcing certain service contracts with hospitals that may require them to pay artificially inflated prices for maintenance.

"We don't know the timing as to when this issue will be resolved, but we are hoping to get it wrapped up as quickly as possible," Young said.

The Justice Department's case could impact the outcome of another case, a class-action lawsuit brought by Wadley Regional Medical Center in Texarkana, TX, which alleges that GE violated antitrust laws by prohibiting certain hospitals from competing with the company for service contracts (SCAN 10/23/96). The suit, which was filed in October 1996, has not yet gone to trial.