DOJ investigates CA's acquisition of Sterling Software

Computer Associates International Inc. has confirmed that the U.S. Department of Justice is looking into its US$4 billion acquisition of Sterling Software Inc.

In a statement, Islandia, N.Y.-based CA said the DOJ's inquiry into the March 2000 purchase of Sterling raised questions similar to those the DOJ posed about its buyout of Platinum Technology International Inc. In September, the DOJ filed a lawsuit against CA seeking up to $1.27 million in civil penalties from the company for prematurely taking control of Platinum, a practice known as "gun-jumping." CA denied the charge.

However, in its statement yesterday, CA said it was told by the DOJ that the inquiry into its takeover of Sterling was "dormant even though it remains open."

A Justice Department spokeswoman said the DOJ had no comment.

The news comes at a time when CA is already under investigation by the U.S. Securities and Exchange Commission and the U.S. Attorney's office over its accounting practices.

In the Platinum lawsuit, the DOJ accused CA and Platinum of breaking premerger waiting period requirements and price-fixing laws when CA bought Platinum in a $3.5 billion deal announced in March 1999. The DOJ eventually approved the sale, subject to certain conditions.

According to the DOJ, the violation allegedly occurred when CA ended a practice that offered large discount rates to Platinum customers purchasing software leases before the end of the DOJ's specified waiting period. By doing so, CA and Platinum forced customers to pay higher prices and broke antitrust laws.

"The Platinum acquisition agreement contained essentially the same provisions that the company had used without objection in many of its prior acquisitions since the late 1980s," CA said in the statement. "CA believes its conduct in Platinum was proper. Nevertheless, CA was mindful of the issues that had been a concern to the department with respect to the Platinum acquisition at the time of its acquisition of Sterling Software in early 2000. For that reason, CA stated that there is no basis for any similar concern with respect to the Sterling acquisition."

A CA spokesman said the company had no comment beyond the statement.

Sterling was sold to CA by Dallas investor Sam Wyly, who has since become one of the company's harshest critics and has made two attempts to remove some of CA's top executives.

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More about CA TechnologiesDepartment of JusticeDOJPlatinum TechnologySecurities and Exchange CommissionSterling Software

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