SDL Hears from the Department of Justice

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Posted by Donald A. DePalma on February 2, 2006 in the following blogs: Translation and Localization, Web Globalization, Business Globalization, Technology, Interpreting, Market Data, Global Marketing, Best Practices, Supplier Business Issues
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Last week we reported on the U.S. Department of Justice's preliminary investigation into SDL's July 2005 acquisition of Trados. When we first contacted CEO Mark Lancaster for comment on the investigation, he sniffed that SDL had not been informed of any investigation. Since then Lancaster has "made contact with the DoJ."

The question that everyone has asked us is "why did the Justice Department wait 6 months after the deal was consummated to investigate it?" Three things come to mind: 1) the language industry traditionally does not have a very high profile, something we noted in our January 2005 report, SDL 2005: Opportunities and Challenges, so no one at the DoJ took notice of a US$60 million buy-out among the US$1.1 trillion in U.S. M&A deals that occurred in 2005; 2) the DoJ has just as big a backlog as the FBI in processing events that concern it; or 3) a competitor belatedly "dropped a dime" (that's detective novel slang for informing on someone -- a dime is the 10-cent coin that once was the cost of what is now a US$0.75 phone call).

Lancaster's own spin on the investigation is that "I think the industry might actually be turning a corner with higher levels of interest from C-level [that is, CEO, CIO, CMO, etc.] outside of translation specialists. This is probably due to more effective solutions from the industry to address global information management."

While we think a competitor squealed on SDL, we do agree that the industry's profile is a bit higher than it was a year ago. Our new report on the language services industry concluded that events in 2005 such as Lionbridge's acquisition of Bowne Global, SDL's ascension to the London Stock Exchange's FTSE All-Share Index, national security concerns, and general business, marketing, and government interest in minority languages contributed to broader financial market awareness -- and apparently greater Justice Department scrutiny.

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