Impact of AT&T, IBM decisions
Assistant Attorney General William Baxter ''has certainly thrust himself into history,'' in the words of one lawyer, by ending antitrust litigation as significant as any since Standard Oil was split up in 1911.Skip to next paragraph
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The finales of the Justice Deparment's mammoth suits against American Telephone & Telegraph Company and International Business Machines were dissimilar: ''Ma Bell'' lost two-thirds of its assets, while IBM walked off without even getting dust on its lapels.
But both sudden results hinged on the flat-out speed with which electronic equipment is changing. AT&T, an economic behemoth desperate to chase the glittering promise of telecommunications, was willing to jettison 22 local operating companies for the chance to start running. IBM, after numerous favorable decisions in private antitrust cases, found itself freed partly because the computer industry is greatly changed since 1969, when the Justice Department filed its suit.
The final result may be ironic: With the line between telecommunication and data processing growing finer by the day, it is likely ''these two companies will turn out to be one another's most intense competitors,'' said Mr. Baxter at the end of a tumultuous Friday afternoon.
Baxter, a former Stanford law professor, is an exponent of the ''Chicago school'' of economic thought. As applied to antitrust, this view holds that sheer size does not automatically equate with damaging political and economic power.
''I have no preference about large size vs. small size,'' said Baxter while announcing the IBM decision. ''The competitive market produces the right size.''
This line of thinking, while contrary to much traditional political theory about antitrust, has been quietly gaining credence in the courts, say experts.
''Baxter obviously has different views than some other people would have,'' says Donald F. Turner, who worked on the beginnings of the IBM case as assistant attorney general for antitrust from 1965-68. ''I'd say his rhetoric may be a little more conservative - but the law may have been drifting that way anyway.''
The dismissal of the case against IBM - pending for 13 years at a cost of between $1 million and $2 million a year - showed Baxter's beliefs clearly. Though some on the Justice Department's career trial staff wanted the case continued, Baxter argued that, under Section 2 of the Sherman Antitrust Act, IBM could not be sued simply because it held a monopoly. It must have obtained that monopoly illegally to have broken the antitrust law, he said. Baxter said the government probably would lose the case, and that continuing it would be a waste of time and money.
''In some ways, the ultimate horror'' would be for the case to stretch on for another 20 years, he said.
In addition, the market IBM was accused of monopolizing has since declined in importance. Small companies, offering small and specialized computing systems, have become a major force in the industry.
''Simply because you have a large market share, you do not exercise market dominance,'' says a Washington antitrust lawyer. ''In computers, the basic market has changed from where IBM was strong - mainframes.''
Baxter's much-discussed ''bigness isn't badness'' approach to antitrust doesn't mean it's now open season for monopolies. As Donald Turner points out, AT&T received more than a slap on the wrist.