The Supreme Court declined yesterday to review the dismissal of a $90 million antitrust suit against American Telephone & Telegraph Co. and 23 of its operating affiliates.
The plaintiffs were about 1,000 leading corporations that replaced PBX equipment with the Centrex system, which uses switching equipment at local exchanges rather than subscribers' offices to link phone extensions to each other and to the general phone network.
The case arose from an exemption in the Excise Tax Reduction Act of 1965 for "private communication service" such as Centrex provided the seller charges for it separately.
The Bell System did not establish a Centrex separate charge until 1971 and 1972. As a result, the plaintiffs complained, they had to pay out $30 million in excise taxes. Blaming the delay on an alleged conspiracy among AT&T and the affiliates to restrain trade, the corporations filed a suit for treble damages.
In July 1977, U.S. District Judge Edward Weinfeld in New York City dismissed the suit "in its entirely upon the merits." Terming his 88-page opinion "carefully considered," the 2d U.S. Circuit Court of Appeals upheld him last March without writing an opinion of its own.
Six of the corporations then sught but failed to win Supreme Court review. The companies were DuPont Glore Forgan Inc., Home Insurance Co., Monsanto Co., Reynolds Securities, Schenley Industries and Swift & Co.
One of the plaintiffs' accusations was that the Bell companies delayed instituting separate charges for Centrex lest the charges come under attack in regulatory commissions as excessive and discriminatory. Only when threatened by competition from non-Bell suppliers of intercommunications did separate billing begin, the suit of the evidence" negated such conten-alleged.
But Weinfeld said that "the totality tions which, he said, were "based largely upon fragmentary excerpts from documents and testimony taken out of context."
The plaintiffs claimed that they had been deprived of the benefits of "independent pricing decisions" because the affiliates - even those only partially owned by AT&T - are controlled by the parent company, which is the world's largest private economic enterprise.
The defendants rejected the accusation, saying that AT&T merely had made recommendations as to separate charges and what they might be, and that each affiliate was free to accept or turn down the advice.
Agreeing, Weinfeld said that the plaintiffs "failed to establish their claim that the defendants entered into any conspiracy relating to Centrex rates." He also cited indications that in developing the rates, "each operating company individually exercised independent judgment . . ."
As to alleged price fixing, the judge said that the Bell companies "entered into no contract, combination, or conspiracy to establish and maintain a uniform Centrex rate structure."
Pointing out that the operating companies don't compete with each other because each has a monopoly in a particular geographic area, Weinfeld said that, even if they had had an agreement on Centrex rates, it "would not have constituted an unreasonable restraint of trade in the circumstances of this case."
What did account for the approximate six-year delay in setting separate Centrex charges?
First, said Weinfeld, revising tariffs to reflect separate charges was expected by the defendants to be "difficult, expensive and time-consuming."
Second, the judge continued, it wasn't "wholly unreasonable" for AT&T to believe that it would be pointless to revise the tariffs, because Congress indicated year after year that it was going to let the excise tax on communications expire altogether. In 1970, however, Congress at last made a final decision: The tax would remain in effect 10 more years.
In their unsuccessful petition for Supreme Court review, the six corporations denounced "the lack of meaningful appellate review." They termed Weinfeld's opinion "a blueprint" for affiliated companies to reach anti-competitive agreements that "avoid the reach" of the Sherman Act.
In a separate action, the Supreme Court refused an AT&T request to avoid turning over 2.5 million documents sought by the Justice Department for the antitrust suit in which it accuses the company of using illegal methods to suppress competition.