BUSINESS AND THE LAW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00901R000500230027-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 14, 2016
• Document Release Date: November 30, 2000
• Sequence Number: 27
• Publication Date: April 23, 1985
• Content Type: NSPR

Hies to work together, it paid them to do so. Quick-
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"
Business and the LawadE'"" "
r;a AP' AM NEW YORK TIMES
Q* droved t,L?pI ^sa~200 64fW t4A10&91-00901 R00050023 27-2
Toiiit. Research
Bafriers Fall
I .WHEN Adm. Bobby $. Inmari first consid-,
ered heading up a risky new joint re-
search venture involving many of the na-
tion's top computer and electronics companies, his '
i lawyers immediately said the business plan reeked.
with antitrust problems.
"I was urged not to do it; I was told legal hurdles
could be overwhelming," Admiral Inman, the for-
mer Deputy Director of Central intelligence, said
recently. ?Naturally, I was very concerned at the
outset, but I decided to go ahead anyway.
A scant two and a half years later, worries about
putting competing engineers in the same research
laboratory seem almost laughable. Last month,
the Justice Department said that it had no prob-
lem with Admiral Inman's 20-company Micro-
n.electronics and Computer Technology Corpora-:
~1?tion.'
More. importantly, the , Reagan Administration,
has openly Invited more of the same: In 'the tech-
nology war against Japan, even a consortium in-
volving virtually every American player in an in-;
dustry could well pass antitrust scrutiny, said J;.
.PaulMcGrath, who recently left the post of Assist-':
~r-antt Attorney General in charge of the antitrust-
If division.. . ?wS 'F lr+t,}
r ...- ? ..?::? ?fx=.,a-rfi, .
"The message was clear, and it can't help but_,.
;.foster- more cooperative R&D," said Larry W.
o_Sumney, president of the Semiconductor Research
,-Corporation, a consortium of 40 electronics comps
rcide to pursue other avenues of joint development
A that once looked doubtful, it will now be possible." .
For decades, research and development consort.;;
11.thwn raised the same sort of problems that have
plagued mergers and joint ventures within an in-
,
dustry. Companies joining togetherto develop .new'`
,
s technologies, critics charged, could reduce compe-' ,
I titian by coordinating the pace of innovation. At
wors , they could become exclusive clubs, ,,all of their expensive technological gems within keeping'
utamily: : ; _ r.:.
i+ Defenders of such ventures have long argued
is that society is best served by the economic efficien-
cies of teamwdrk, but untli'receatly the argument
carried little weight. Ina 1964 case involving a joint.;,-.-,.
venture the Supreme Court said that "possible
` economies cannot be used as a defense to illegal-,.,
1N
At the same time, joint `research and develop-_
meat has always been afforded a somewhat privi-
leged; if precarious, niche in the complex world of
antitrust law:. p. ' . c
Antitrust regulators have said that while cooper
ation among competitors is usually suspect, it may
be necessary if no individual company is willing to
invest heavily in a risky new idea - a view that be-"
came increasingly popular as Japanese manufac-
turers began eating into the American market. In
Japan, the Government not only allowed compa
-
ly, a rising chorus called for a change in American
antitrust rules. w. , , '.?.< -`-'.
"Remember, the precedents here were all set
when society believed that the U.S. held - forgive
the pun - all of the industrial chips," said Phillip
E. Areeda, a professor at Harvard Law School and
an expert on antitrust law. "Obviously, the psycho;
logical background is different today."
in response to pressure by Admiral Inman and
others, the Justice Department has raced to refine
its "rule of reason" approach in evaluating re-
search and development consortiums.
"We've essentially come to the conclusion that
there are only two types of arrangements that are.
troublesome," Mr. McGrath explained recently.
"One is where the attempt is to limit innovation in
an industry. The second is where there is an effort
to limit what smaller competitors can do." .
In the computer industry, Mr. McGrath insisted,
there are no such risks. Conspicuously absent from
membership in Admiral Inman's M.C.C. venture is
the biggest player of them all, the International
Business Machines Corporation. Even if I.B.M.
were to join M.C.C., a situation Mr. McGrath said
he was "not prepared to evaluate," hungry Japa-?"
nese and European manufacturers would keep the
marketplace honest. (I.B.M., for the record, says
it is still not interested in joining M.C.C., in part be-'
cause the company would have to divulge some
proprietary research data to its competitors.) -;
Even supporters of the Justice Department's ap-
proach, however, concede that it leaves several
problems unresolved. "I think there is agreement'-
that you don't need as many centers of R&D to fos-"
ter technology competition as you need companies n
i''? in an industry to foster price competition,". Mr
Areeda said. "But what is the.right number? I
don't know if anyone has the answer to that
Moreover, some critics say that the mere pres-
ence of competition is not enough. It has to be
competition with muscle.-t. A!~rxt.h;.
A consortium of the biggest American players,'
some legal experts argue, would bold the power to`-'
industry standards that leave nonparticipants"
out in the cold. In the computer industry, for exam-`:
pie, a consortium of manufacturers could agree on.-
a common computer language, set of protocols orb
configuration of hardware..
The result could be the exclusion of a foreign"
competitor. And any competing company, Amer .
scan or forei;,n, that wanted to make a quantum
leap with radically new software' technology, for-
example, would have to risk ignoring the de facto
stand,
r~l. = L r. i t' ' t' E
the other hand, many manufachuers, espe- 7:; .
~y in the computer field, choose their own set of.;?
standards just t o be different-not b e t t e r . T h e re
suit is greater expense for users of many different'.
types of equipment. " '-. c. __ r.. ~.' .....t.:r+e. i S:.;e:f. ? .l tC:
.With most Of the antitrust hurdles now toppled, it
may be the unwillingness of competitors to join
bands, not the unwillingness of the courts, that
blocks further cooperation.?
"R&D is tremendously expensive, and It is get
ting more expensive every year," Mr. Sumney.
said. "The question now isn't how much joint re
search is legal, it's how much the industry can of-,
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 Pka ApiirpANd For Release ~0631WTWYCIA-RDP91-00901 R000500230027-2
'^15 April, 1985
Topic: ARMS
Bomb Inman, 54, di-
rected the National ecu-
rity Agencv from
and was deputy director
oTthe CIA 1981-1,962. e
is now press en o e
Microelectronics and
_
Computer Technology
Corp. in Austin. a o0
part in last week's con er-
e ce on international se-
cunt and arms control
Atlanta. He was inter-
viewed by USA TODAY's
Mark Mayfield.
INQUIRY
Bobby Inman
USA TODAY: Was there
much talk about Soviet leader
Mikhail Gorbachev's offer to
freeze medium-range missile
deployment?
INMAN: With this group,
there is a broader understand.
ing of what the Soviet force lev-
el programs have already
been. They have already ex-
ceeded what we had under-
stood previously to be their in-
tended ceiling on SS-20s. A
freeze at this point in time
would simply be a freeze at a
level that's already larger than
they originally said they were
going to build.
USA TODAY: Do you think
You just can't sweep
`star wars' issue aside
USA TODAY: You partici-
pated in an arms control con-
ference hosted by former
presidents Jimmy Carter and
Gerald Ford in Atlanta last
week. Soviet leaders attended
too. How did that go?
INMAN: It was a very lively
series, though there was as
much debate among the Amer-
ican participants as there was
among the Soviet participants.
It must have been fascinating
for the Soviets to watch eight or
nine different U.S. views -
and to see the difference in
how openly we argue different
issues. If I were to stand back
and look at it, as compared to
past conferences, it's clear that
the current administration's
Strategic Defense Initiative has
enlivened the discussion on
strategic forces. USA TODAY: What did the
participants think about SDI
- "star wars"?
INMAN: Whether people
like the Strategic Defense Ini-
tiative or don't like it, it has
forced a recognition of the rate
at which technology is chang-
ing - that we are going to have
to give thought to the question
of strategic defense systems.
That does not automatically
mean weapons in space. There
are, of course, proponents who
would put an entire strategic
defense system in space. There
are others who would have it
it's at all encouraging that
Gorbachev made the offer?
USA TODAY: Will "star
wars" have much impact on
the Geneva talks?
INMAN: You have to begin
factoring that into arms control,
agreements - particularly if
the view you take is that you
want to approach it in a collab
orative way. You've got to ne-
gotiate that before you're ever
to a point of having it ready to
do. I'm afraid the public image,
has been captured by that
phrase "star wars." You think
about space platforms zapping
missiles in space. That may no
ultimately be what a strategic
defenses will look like at all,
That might be an element of it,
but it might be only a small ele~-
ment, or it might not even be
part of It
USA TODAY: Do you favor
a summit meeting betwee
President Reagan and Gorb -
chev?
entirely land-based, entirely INMAN: We don't do private
land and air. negotiations in the modern
USA TODAY: Is a defense world. Some of them take
against missiles really poses-, place around the table and the
ble? rest take place around the me-
dia, trying to shape public opin-
INMAN: As one looks out to- ion. The other thing that we
have have rehearsed with this group
to detect
ward 1995, the ability by a variety of sensors, to cor-
relate those detections in sec- Pershing and cruise missiles to
onds, to discriminate between Europe was not a U.S. idea.
warheads and decoys, and to That's so often forgotten in this
target thousands of objects in country. It came from West,
seconds, might be doable. Be- Germany - from Helmut
cause we cannot in fact say Schmidt, who was then chap-
that is not going to occur - the cellor. He first articulated it in
technology is moving at such a late '77 or early '78 as a re-
rate that you have to say it sponse to the changed situation
could occur - then you have , when the Soviets deployed
to begin thinking about what their SS-20s. The USA did not
the form of strategic defenses pick up on it for about a year.
might be. Either you ban it, or
you plunge in to build a system
unilaterally, or you try to nego-
tiate with the other major pow-
er and do it in a collaborative
manner.
USA TODAY: So the "star
wars" issue was very much a
part of the debate in Atlanta?
INMAN: It was a very signifi-
cant topic. What it has at least
done is to stir up those who
spend a lot of time thinking
about strategic issues - you
just can't sweep it aside. You
have to at least come back and
examine the implications. Part
of the reason you have to do
that is because of changing
technology.
INMAN: I was not in favor of
a race to have a conference be-
tween President Reagan and
General Secretary Leon d
Brezhnev or Konstantin Cher-
nenko. On the other hand, My
own view is that there is sonhe
value in a meeting with Gor a-
chev. He is of a different gener-
ation. He will not be acting In-
dependently. This is also a time
frame in which he will
forming his views for what
could turn out to be 20 years' of
leadership. And therefore, giv-
en how limited a view he has
had of the outside world I
think the best of all words
would be a visit to this count ry.
If that is not possible, I still
value in a meeting at a neut M1
site. I think it would be of more
value to him and to the whole
process if it were in this coiun-
try.
USA TODAY: Did the Sovi-
ets in Atlanta seem to over-
look that point?
INMAN: They detoured
around it.
USA TODAY: Will the con-
ference have any effect on
the arms talks in Geneva?
INMAN: No. This really
won't affect those at all. It gave
the Soviets a chance to re-
hearse positions that they'll be
doing there.
USA TODAY: Why?
INMAN: The broader se
he gets of the pace of Chang in
the rest of the world, the ore
he will have to contemp ate
Continued
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 -RDP91-0090tJfense of Moscow - RQQ 2JJQ0&'h?~ty.
what has to happen in the Sovi-
et Union to be able to adapt to
the pace of change in the out-
side world - or get left further
behind.
USA TODAY: Do you be-
lieve his personality will help
in dealing with other nations?
INMAN: He's a skillful actor.
He's going to play beautifully in
the media. I don't see how the
Soviets can pass up the kind of
coup that's likely to bring off.
What you're going to see now is
that the Soviets are going to
play this game with much
greater skill. He will find in the
dialogue with the president
that Reagan's a great deal
more pragmatic than the rhet-
oric might otherwise suggest.
By Susan Harlan, USA TODAY
is a conference like this?
INMAN: The minimum lev-
el of the value of such a confer-
ence is that foreign representa-
tives take home, both an under-
standing of the diversity of U.S.
views, and the process by
which U.S. views ultimately
correlate.
USA TODAY: Do you see
any other benefits to come
out of all the talk about "star
wars"?
INMAN: Perhaps this con-
ference has helped get across
to our Soviet colleagues that
they don't end the discussion
on strategic defenses purely by
focusing on "no weapons in
space." It is a much more com-
plex problem. It's also given us
the opportunity to view and ask
questions about the fact that
the Soviets have for years
maintained an anti-ballistic de-
And they have modernized it at
very major costs and have
maintained for years a very vi-
able research program looking
at additional weapons for up-
grading their ABM system. So
they can't have it both ways -
saying there's no value for
ABMs and yet justifying spend-
ing the limit the treaty system
has now authorized.
USA TODAY: Is there a
way to strike a balance of
power between the two coun-
tries?
INMAN: What we have diffi-
culty in reaching agreement on
is: What is a balance? While
there is no insistence from at
least the majority of U.S. par-
ticipants that you have to have
an absolute balance, or that
you've got to have superiority
in nuclear forces if you are in-
ferior in conventional forces -
you cannot foreclose first use
of nuclear weapons as the way
you protect yourself against
that conventional superiority.
If a decision were made in the
West to build conventional
forces that fully matched the
Soviets, then you could enter
into a discussion on "no first
use." It would be very unwise
to do that if you did not have
the commitment or any of the
building actually being done.
That's not just an investment
by the USA. That clearly would
have to be our allies in Western
Europe willing to spend the
kinds of dollars, francs, pounds
for conventional forces.
USA TODAY: Were the
talks with the Soviets in At-
lanta as tough, say, as negoti-
ating with the Soviets in Ge-
neva?
INMAN: No, because you're
not down to the stage of having
to hammer out some kind of
agreement. You aren't going to
have to turn to the Senate to
ratify the terms. We only dealt
with problems like verification
in passing. In negotiations, you
really have to get out and do
very precise things. But I think
we don't do enough of the ex-
posing of views.
USA TODAY: Was this con-
ference unique?
INMAN: Clearly it's unique
because two former presidents
were involved. There is no
comparison to other confer-
ences, because in this one for-
mer presidents were able to
say very directly how they re-
acted to certain situations.
d f- 4&yFYP428QffW2
Leaders debate 'star wars'
More than 60 leaders from around the world, includ-
ing a delegation from the Soviet Union, debated major
arms control issues last week in Atlanta at a conference
hosted by former presidents Jimmy Carter and Gerald
Ford. Carter said he hoped the conference left the Sovi-
et and U.S. participants with a better understanding of
the issues that separate them.
The two major areas of debate included:
^ The USA's deployment of Pershing 2 and cruise
missiles in Europe. U.S. officials say the missiles are
needed to offset a Soviet buildup of medium-range mis-
siles. The Soviets say the deployment represents an es-
calation of the arms race.
^ President Reagan's Strategic Defense Initiative,
sometimes called "star wars," which aims to develop a
defense against nuclear missiles. The Soviets claim that
Reagan is trying to militarize space. Many U.S. experts
counter that the Soviets are hard at work on their own
"star wars" program.
Source; Conference on International Arms Control, Emory Univenstty
 a
1
10 April 1985
US spy agencies expand intelligence
efforts; still face clamor for better data
By PetecGrier Demanding such specificity may be I
Staff writer of The Christian Science Monitor _ asking for too much, a House Intelligence
Washington Committee report concludes. While the
How good are US intelligence agencies CIA didn't pinpoint the coming attack, it
at figuring out what goes on in the world? did warn repeatedly of possible vehicle-
After all, information on such things as bomb attacks in Lebanon, official sources
Soviet SS-20 missile launchers and the in- say.
tentions of Islamic militia often greatly in- Overall, the ability of US intelligence
fluences United States officials pondering to decipher world events has been greatly
hard decisions. strengthened in recent years, according to
The quality of US intelligence assess- government officials. With bigger budgets
ments declined during the late 1960s and have come more analysts. Contacts with
early '7 Os, former and current intelligence outside experts have been expanded.
officials say. But in recent years the per- Training standards and travel time for
been ability intelligence ttlhese gence data have been vastlyrincreased,
beeen markedly strengthened,
sources assert., these sources say. b der The number of lon-term reports, deal-
a
'
The CIA estimates that Soviet spend-
ing on weapons has been relatively. flat in
recent years, around 2 percent annually.
The DIA believes it has been between 5
and 8 percent.
But focusing on this number may mag-
nify the differences between the agencies,
some say.
Still, "there are relatively few disagree-
ments on what the Soviets have deployed
in the strategic arena," says one official.
re better, we work on a ro
"We
range. of subjects today. We still have ing with subjects such as possible Soviet
imperfections we're working. on,'.', says. a weapons of the future, has been increased
senior intelligence source. and will top 700 this year. National Intelli-
gence Estimates, large reports with contri-
Current Washington debate over the . butions from numerous agencies, now fea-
data-producing effectiveness of the CIA, ture dissenting opinions, in the body of the
the Defense Intelligence Agency (DIA), fit.,
and other US intelligence arms in many
ways marks the closing of a circle. . "We're trying to be more forthcoming
In the late '60s and early '70s, the po- with policy people about the quality of our
litical climate and revelations of contro- sources, and the level of confidence in -our
versial spy operations put US intelligence judgments," a senior intelligence official
agencies into disrepute. Congress set up says.
oversight committees to keep a close eye Critics are skeptical of the effects of
on the CIA, And intelligence budgets w these reforms. Allan Goodman, a former
slashed. At one point, the num r o CIA high CIA official who is now a George-
- analysts studying the Soviet economy fell town University associate dean, feels re-
to 50, from a high of 200. / cent changes have had only a marginal ef-
Sometime during the Carter adminis- fect on the quality of intelligence.
tration, things began to change. Intelh- The US intelligence community, Mr.
gene budgets quietly started to grow Goodman complains, does not study its 11
again. failures. Frank rating of sources is done
"This turnaround was led in some de- only in the most important reports, he
gree by CongressIt accelerated in a ma- says, and Central Intelligence Director
jor. way in the early '80s," said Adm. William Casey has altered reports to fit
Bobby Inman; former deputy director of his preconceived political views.
the CIA, in a recent interview. Congress, for its part, stands in be-
. But with this rejuvenation have come tween these poles of opinion.
demands for better performance. A House Intelligence Committee re-
Policymakers today want more detail in port, issued earlier this year, concluded
their intelligence reports than ever before. that "a number of steps have been taken
When a terrorist bomb leveled the US Ma- to improve the quality of intelligence.
rine barracks in Lebanon, for instance, Nevertheless, shortcomings in analysis
some members of Congress complained of and collection continue to appear."
an intelligence failure, saying. the marines Analysis of the rate of growth of Soviet
should have been warned about a pending ' defense spending is one subject that in
attack. particular has recently caused problems
in the US intelligence community., .
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N It U l~~
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