Cisco Appears to Be Off the Hook in FTC Inquiry

Cisco Systems Inc., the dominant seller of data networking equipment, is expected to announce today that the Federal Trade Commission has ended its inquiry into possible antitrust violations stemming from Cisco’s talks with two large telecommunications rivals.

The FTC’s decision not to pursue a case against Cisco leaves Microsoft Corp. as the only one of three major technology companies that faced antitrust problems earlier this year.

Intel Corp. reached a settlement in March with the FTC regarding antitrust charges that it forced a company to license its technology to Intel. Cisco, Intel and Microsoft each dominates its respective segment in the information technology world.

Cisco was under investigation with respect to partnership talks it held in late 1997 and early 1998 with Lucent Technologies and Nortel Networks. Although the talks did not result in any agreements, there was speculation that the companies may have sought to divvy up the communications market in a manner that would reduce competition.

Dan Scheinman, Cisco’s vice president for legal and government affairs, said the company cooperated fully with the FTC’s inquiry, immediately sending several boxes of documents to the agency. The FTC appears to have been satisfied with Cisco’s explanation that the talks were an effort to explore ways the companies could approach new markets rather than efforts to divide them.

Robert Taylor, an antitrust attorney with Howrey & Simon, said it is difficult to conclude much from the FTC’s decision to drop the case. “There are a limited number of enforcement dollars, and they have a lot on their plate,” Taylor said.

Whereas Cisco and Intel are off the hook, Microsoft is mired deeper than ever in antitrust problems as it tries to fight three separate antitrust suits and a breech-of-contract suit.