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Cisco under Government scrutiny

Cisco under Government scrutiny

Cisco Systems has joined the roster of information technology powerhouse companies under US federal investigation.

In a statement last week, Cisco confirmed that the US Federal Trade Commission (FTC) is investigating discussions the company had with rivals Lucent Technologies and Northern Telecom.

The statement does not divulge the nature of the conversations except to say that they involved "partnership opportunities", but a published report said that the FTC is investigating whether Cisco intended to get its competitors to agree to divide the network market. Such alleged collusion is illegal under federal antitrust law.

The FTC has requested details of meetings between executives from the companies in an inquiry reportedly begun after articles appeared in the New York Times suggesting Cisco executives might have tried to divvy up the market with appeals to the competition, according to a source close to the investigation.

Cisco views the probe as "preliminary and routine", said the statement from Dan Scheinman, Cisco's general counsel.

"These discussions are not a review of Cisco business practices as a company, but instead a review of talks that ended more than six months ago."

An FTC spokeswoman, following commission policy, would not confirm or deny the report and declined to otherwise comment. The FTC is an independent government agency.

In its statement, Cisco contends that its objective in the discussions was to forge new partnerships leading to lower costs and more choice for consumers.

Lucent cooperating

Lucent has been told by the FTC that it is not the target of the investigation, said Lucent spokesman Bill Price. Lucent is cooperating with the FTC in the investigation.

But the companies don't just compete with one another - they are also customers and suppliers for each other and as such are often involved in discussions of one form or another. The discussions in question involved partnerships, but those talks ended earlier this year when it became clear that the companies have conflicting strategies, Price said.

He declined to elaborate more on the discussions.


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