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United States v. American Telephone & Telegraph Co.

524 F. Supp. 1336 (1981)

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United States v. American Telephone & Telegraph Co.

United States District Court for the District of Columbia

524 F. Supp. 1336 (1981)

Facts

American Telephone & Telegraph Company (AT&T) (defendant) owned the Bell Operating Companies (the Operating Companies), which provided local telephone services; Western Electric, which made telephones and related hardware; and Bell Labs, which conducted research. The three companies often worked in conjunction. Bell Labs and Western Electric set technical standards across the telephone-services market. Western Electric supplied the Operating Companies with much of their necessary hardware, often counseling the Operating Companies about the equipment they needed to meet the standards that Bell Labs and Western Electric set. The Operating Companies, under pressure from AT&T, often purchased equipment from Western Electric despite other companies in the telephone-hardware market selling equivalent equipment at lower prices or before Western Electric had manufactured the needed products. The government (plaintiff) brought a suit under § 2 of the Sherman Act alleging that AT&T foreclosed competition in the telephone-equipment market by incentivizing the Operating Companies to buy their equipment from Western Electric, thereby exploiting AT&T’s vertical structure to further its monopolistic power. AT&T moved to dismiss the case, arguing that its business practices were efficient and lawful.

Rule of Law

Issue

Holding and Reasoning (Greene, J.)

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