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DOJ to block Viasoft deal
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October 28, 1999: 6:51 p.m. ET
Justice officials concerned Compuware merger would hike software prices
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NEW YORK (CNNfn) - The U.S. Justice Department said Thursday it planned to block the proposed merger of Compuware Corp. and Viasoft Inc. in court because the combination could result in higher software fees.
Justice Department officials said they were concerned the merger would give Compuware a dominant hold over certain types of critical mainframe software -- testing/debugging software used to check for errors as program code is written.
Compuware's chief competitor in that category is Viasoft, which it agreed to acquire in August in a $129 million deal. The government said it would file a civil antitrust lawsuit to block the agreement.
"Unless this acquisition is blocked, major companies, governmental entities and universities will suffer the loss of competition, resulting in higher prices, less innovation and poorer service and support," Joel Klein, an assistant attorney general in the Justice Department's Antitrust Division, in a written statement.
Gary Reynolds, a spokesman for the Farmington Hills, Mi.-based Compuware, said the company was currently "weighing its options" as to whether to continue its pursuit of the merger.
"I don't know which of those options our lawyers will choose," he said.
Reynolds said he expected the company to release a statement later Thursday evening or Friday morning announcing its decision.
Compuware already extended its tender offer for Viasoft once earlier this month to give regulators additional time to review the deal.
Viasoft (VIAS) lost 1-1/16 to close at 7-1/2 during normal trading hours, then fell to 5 in after-hours trading, according to Nasdaq as word of the Justice Department's plans filtered out.
Compuware (CPWR) rose 3/16 to 27 during normal trading hours, then jumped to 28 in after-hours trading, Nasdaq said. 
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