CORP ACFT HAS ERRONEOUS ENCODING READING; CAUSES TCASII RA.

Narrative

LGT AT FL200 WBOUND. SMT NEBOUND AT FL190 APPROX 10 MI APART; HEAD-ON. SMT MODE C JUMPS FROM FL190 TO FL205. ACFT WAS QUESTIONED ABOUT ALT AND CONFIRMED LEVEL AT FL190. TCASII EQUIP ON LGT ISSUED A CONFLICT RESOLUTION DSCNT AND THE PLT ADVISED HE WAS DSNDING. PLT WAS ADVISED THAT SMT WAS CONFIRMED LEVEL AT FL190. ACFT PASSED DIRECTLY OVER ONE ANOTHER. LGT PLT LATER ADVISED THAT HE HAD ARRESTED HIS DSCNT AT FL197 BECAUSE OF THE EARLIER ISSUANCE OF TFC AT FL190 BY ATC. IF PLT HAD FOLLOWED TCASII RESOLUTION FULLY; ACFT WOULD HAVE PASSED WITH 500 FT OR LESS VERT SEPARATION -- DECREASED FROM THE 1000 FT ALREADY ESTABLISHED BY ATC! EVERYONE DID WHAT THEY WERE SUPPOSED TO DO; AND 2 ACFT WERE BROUGHT INTO DANGEROUS PROX BY A SYS INTENDED TO AVOID COLLISIONS! SUPPLEMENTAL INFO FROM ACN 229034: I WAS LEVEL AT 19000 FT; THERE WAS AN LGT CALLED AS TFC AT 1 O'CLOCK AND 20000 FT. EVIDENTLY; MY MODE C WENT TO 20500 FT; THAT TRIGGERED THE LGT ACFT TO GET A TCASII WARNING TO DSND. WHEN THE LGT DSNDED; THAT BROKE THE 1000 FT SEPARATION. BOTH PLTS HAD EACH OTHER IN SIGHT. THE ALTIMETER THAT WAS IN MY AIRPLANE AT THAT TIME WAS A LOANER MODEL; MINE WAS OUT BEING REPAIRED. I MADE SOME TELEPHONE CALLS AND GOT A THIRD ALTIMETER SHIPPED TO REPLACE THIS ONE; EVEN THOUGH THIS WAS THE THIRD FLT WITH THIS ALTIMETER AND NO PROBS WERE EXPERIENCED BEFORE.