Cisco Faces FTC Investigation Over Partnership Discussions

Strategic Insights -

Cisco Systems, Inc. has confirmed that the Federal Trade Commission is investigating its discussions with two competitors, Northern Telecom Ltd. and Lucent Technologies, Inc. regarding potential partnership opportunities. According to Cisco's General Counsel, Dan Scheinman, the discussion involved exploring new markets and servicing joint customers, and not a review of the company's business practices. The investigation appears to focus on whether Cisco proposed splitting the networking equipment market among the three rivals, which Cisco denies.

Key Takeaways:

  • The Federal Trade Commission is investigating Cisco Systems, Inc. over discussions with Northern Telecom Ltd. and Lucent Technologies, Inc. regarding potential partnership opportunities.
  • Cisco views the inquiry as a preliminary and routine matter, focusing on talks that ended over six months ago and exploring new markets and servicing joint customers.
  • The investigation appears to focus on whether Cisco proposed splitting the networking equipment market among the three rivals, which Cisco denies.
  • Cisco General Counsel, Dan Scheinman, stated that the company has a long history of bringing new products to market through internal development, acquisitions, and partnerships.
  • Northern Telecom Ltd. and Lucent Technologies, Inc. also received FTC letters seeking their cooperation in the investigation.
  • All three companies have pledged to cooperate with the investigators.
  • The FTC has not officially announced the investigation, and the outcome is currently unknown.

Statistics:

  • The investigation is focused on discussions that ended over six months ago.
  • The talks were aimed at exploring new markets and servicing joint customers.
  • Cisco has a long history of bringing new products to market through internal development, acquisitions, and partnerships.
  • The FTC has not announced the scope or timeline of the investigation.
  • All three companies have pledged to cooperate with the investigators.

Sources:

  • Cisco Systems, Inc. statement regarding FTC investigation, dated Oct. 5, 2023.
  • Northern Telecom Ltd. statement regarding FTC invitation to cooperate in the investigation.
  • Lucent Technologies, Inc. spokesman statement regarding FTC letter.