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DOJ claims Compuware merger anticompetitive

Federal regulators intend to block Compuware's $162 million acquisition of management software maker Viasoft, saying the merger is anticompetitive.

Federal regulators intend to block Compuware's $162 million acquisition of management software maker Viasoft, saying the merger is anticompetitive.

The Department of Justice said it intends to file a federal suit against Compuware to block its deal to acquire Viasoft, a competitive supplier of management software for mainframe computers.

The move is another example of increased vigilance by federal regulators on consolidation within the high-technology industry. The DOJ already has taken on Microsoft in one of the largest business antitrust cases this century.

Another federal agency, the Federal Trade Commission, investigated Cisco Systems' business practices, alleging that the networking equipment maker made a pact with competitors Nortel Networks and Lucent Technologies to carve up the market for telecommunications equipment. That investigation was closed in June.

The DOJ claims the Compuware-Viasoft merger would reduce competition and "result in higher prices" in the market for management software geared for mainframe computers.

"The effect of this transaction would be to remove an important competitor--Viasoft--and to strengthen Compuware's dominance over these important mainframe computer software products," federal assistant attorney general Joel Klein said in a prepared statement.

"Unless this acquisition is blocked, major companies, government entities, and universities will suffer the loss of competition, resulting in higher prices, less innovation, and poorer service and support," Klein's statement said.

Other firms, such as Computer Associates International and IBM, also compete in the mainframe management software market.

Compuware announced its intentions to purchase Viasoft in July.

Compuware spokesman Doug Kuiper told Bloomberg that the companies plan to announce by tomorrow whether they will abandon the deal or fight the Justice Department in court. "We're considering our options," Kuiper said.

Bloomberg contributed to this report.