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February 29, 1996

Antitrust Review Is Seen on Thomson Bid for West

By CHRISTOPHER DREW

WASHINGTON -- Thomson Corp.'s proposed $3.43 billion purchase of West Publishing Co., a leading provider of legal research materials, is likely to be examined closely by federal antitrust regulators, government officials said Wednesday.

The deal, which was announced Monday, "is big enough, and there are enough markets where both firms have very significant shares, that it is likely to receive scrutiny," said one senior official, who spoke on condition of anonymity.

The officials said it had not been decided whether the Justice Department or the Federal Trade Commission would review the deal.

But a close federal review could delay the purchase or call into question the companies' contention that there is not enough overlap in their businesses to restrain competition.

Thomson, a diversified Canadian publishing giant with $7 billion in annual sales, and West Publishing, a privately held company based in Eagan, Minn., are by far the leading providers of information in a number of areas of legal research, both in printed and CD-ROM forms.

In announcing the deal, Thomson emphasized that West Publishing was best known for primary law data files, including basic information about statutes and court cases, while Thomson's depth was in secondary references and analysis.

But some lawyers who use the companies' products every day consider many of them to be interchangeable, raising questions about whether the purchase would give Thomson undue power to dictate prices.

Thomson's chief financial officer, Nigel Harrison, said the companies had not formally requested antitrust clearance from the government, though they expect to do so within the next few days.

"I think at this stage it's too early to comment on what will happen," he said. But, he added, "We don't believe there's any significant overlap."

Spokesmen for West Publishing -- which has annual revenue of about $830 million -- could not be reached for comment Wednesday night.

The FTC has often taken the lead in reviewing mergers involving media companies, including its continuing review of Time Warner Inc.'s proposed $7.5 billion acquisition of the Turner Broadcasting System.

But the Justice Department has been investigating competition in computer-assisted areas of legal research, where West Publishing is strong, for the last two years, and officials said that could be a factor in which agency reviewed the Thomson-West Publishing deal.

In bidding for West Publishing, Thomson, which publishes 140 newspapers in North America, beat out offers from several other companies, including some that were believed to have been in the $3 billion range.

And a representative of one of the losing bidders, who asked not to be named, said, "Nobody else who was bidding had as many entrants in the legal publishing field as Thomson, and the question is whether the merger of Thomson and West Publishing would insulate the surviving company from price competition."

For instance, West Publishing publishes the U.S. Code Annotated, a multivolume set for $3,200 that contains every federal statute organized by topic, while a Thomson unit publishes the U.S. Code Service for $1,580.

Using their own keyword systems, both companies also publish the most widely used legal encyclopedias, compilations of Supreme Court decisions and treatises on contract law.

Competitors said Thomson and West Publishing were also the two leading publishers of legal information on CD-ROM disks, which are increasingly taking the place of some of the printed volumes because they are much cheaper.

But one major difference between the companies is in on-line research, where West Publishing's main system, Westlaw, competes mainly with Lexis/Nexis, which is owned by the Dutch publishing company Reed-Elsevier PLC.

West Publishing, which was founded in 1872 and has a data base of legal cases dating back more than 100 years, has been looking for new backers to help in its on-line battle with Lexis/Nexis.

Thomson has been expanding its base in electronic publishing through other acquisitions.

Besides the possible antitrust issues, analysts have also raised questions about whether Thomson would be paying too much for West Publishing at a time when court decisions and other legal data are increasingly being disseminated on the Internet free.


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