United States v. AT&T
Encyclopedia
United States v. AT&T was the antitrust case in the United States that led to the 1984 Bell System divestiture
, the breakup of the old American Telephone & Telegraph
into the new, seven regional Bell operating companies (RBOC)s and the much smaller new AT&T.
In the 1970s, the Federal Communications Commission
suspected that the American Telephone & Telegraph
Company was using monopoly profit
s from its Western Electric
subsidiary to subsidize
the costs of its network, which was contrary to U.S. antitrust law. (Yurick, p. 7) The case was filed by the United States Department of Justice
in 1974.
In 1978, Judge Harold H. Greene
of the United States District Court for the District of Columbia
, on his first day on the bench, took over the case. It was settled in 1982 by the means of a consent decree
between AT&T and the Department of Justice, called the Modification of Final Judgment
as agreed by AT&T Chairman Charles L. Brown.
Bell System divestiture
The Bell System divestiture, or the breakup of AT&T, was initiated by the filing in 1974 by the U.S. Department of Justice of an antitrust lawsuit against AT&T. The case, United States v...
, the breakup of the old American Telephone & Telegraph
American Telephone & Telegraph
AT&T Corp., originally American Telephone and Telegraph Company, is an American telecommunications company that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. AT&T is the oldest telecommunications company...
into the new, seven regional Bell operating companies (RBOC)s and the much smaller new AT&T.
In the 1970s, the Federal Communications Commission
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...
suspected that the American Telephone & Telegraph
American Telephone & Telegraph
AT&T Corp., originally American Telephone and Telegraph Company, is an American telecommunications company that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. AT&T is the oldest telecommunications company...
Company was using monopoly profit
Monopoly profit
- Monopoly Profit - Basic Definition :In economics, a firm is a monopoly when, because of the lack of any viable competition, it is able to become the sole producer of the industry's product. In a normal competitive situation, the price the firm gets for its product is exactly the same as the...
s from its Western Electric
Western Electric
Western Electric Company was an American electrical engineering company, the manufacturing arm of AT&T from 1881 to 1995. It was the scene of a number of technological innovations and also some seminal developments in industrial management...
subsidiary to subsidize
Cross subsidization
Cross subsidization is the practice of charging higher prices to one group of consumers in order to subsidize lower prices for another group. State trading enterprises with monopoly control over marketing agricultural exports are sometimes alleged to cross subsidize, but lack of transparency in...
the costs of its network, which was contrary to U.S. antitrust law. (Yurick, p. 7) The case was filed by the United States Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
in 1974.
In 1978, Judge Harold H. Greene
Harold H. Greene
Harold Herman Greene was a federal judge for the United States District Court for the District of Columbia...
of the United States District Court for the District of Columbia
United States District Court for the District of Columbia
The United States District Court for the District of Columbia is a federal district court. Appeals from the District are taken to the United States Court of Appeals for the District of Columbia Circuit The United States District Court for the District of Columbia (in case citations, D.D.C.) is a...
, on his first day on the bench, took over the case. It was settled in 1982 by the means of a consent decree
Consent decree
A consent decree is a final, binding judicial decree or judgment memorializing a voluntary agreement between parties to a suit in return for withdrawal of a criminal charge or an end to a civil litigation...
between AT&T and the Department of Justice, called the Modification of Final Judgment
Modification of Final Judgment
In United States telecommunication law, Modification of Final Judgment is the August 1982 agreement approved by the court settling United States v. AT&T, a landmark antitrust suit, originally filed on January, 14, 1949 and modifying the previous Final Judgment of January 24, 1956...
as agreed by AT&T Chairman Charles L. Brown.