Bureaucrats in Washington simply do not understand technology-oriented businesses.
Several years ago the Federal Trade Commission decided that MSC.Software’s acquisition of Universal Analytics and Computerized Structural Analysis and Research Corporation in 1999 was in violation of Section 7 of the Clayton Act and Section 5 of the FTC Act. The FTC alleged that the acquisitions could substantially lessen competition or lead to a monopoly in the market for advanced versions of NASTRAN. The FTC came to this conclusion in spite of the fact that neither acquisition had to be reported to the federal government under existing reporting thresholds.
The position of the FTC was that these two acquisitions provided MSC with a monopoly for advanced versions of NASTRAN, a market segment in which it previously held a 90 percent share. The government believed that other FEA programs could not be easily substituted for NASTRAN and that users would be hurt by MSC eliminating two small competitors. NASTRAN prices might rise and development restricted to enhance profits.
Solomon to the rescue. The FTC required MSC to license the existing version of NASTRAN to one or two independent companies and those licensees would be able to sell and develop new versions of the software. MSC agreed to this requirement rather than continuing to incur the legal expenses associated with fighting the government in court. Subsequently it licensed NASTRAN to the Unigraphics Solutions division of EDS. The agreement also required MSC to refund a portion of the license fees paid by customers who wished to switch suppliers.
I don’t want to think about how much expense the government incurred arriving at this brilliant solution to a non-problem much less the expenses incurred by MSC. The period in which MSC was required to provide refunds expired on June 17th. According to the company a grand total of “two customers, representing three separate contracts, exercised their option to obtain refunds, totaling approximately $1,500,000.” And both companies are still MSC customers for a broad range of other software products.
What did all this accomplish? Not much. MSC still dominates the NASTRAN market and competes aggressively, both technologically and price wise, with ANSYS, COSMOS and others. It is not hard to draw the conclusion that some government agencies initiate actions such as this one simply to keep their staffs busy.
