Frank Cary, chairman of International Business Machines Corp., testified today that American Telephone & Telegraph Corp. never tried to put pressure on IBM to prevent the giant computer company from competing with AT&T in the telephone equipment market. c
Cary acknowledged that the head of the IBM sales division was concerned as far back as 1972 that AT&T, IBM's biggest customer next to the government, might cut back its purchases of IBM computers if the company moved into direct competition in supplying large switchboards of the type that IBM was selling in Europe.
However, Cary said under questioning, to the best of his knowledge the fear of retaliation was based merely on the "opinion" of the sales force and that he did not "recall" any reports of threats by AT&T.
Cary testified in a $1.5 billion antitrust suit filed against AT&T by Litton Industries.
Litton contends that the telephone company used its monopoly powers to drive Litton out of the telephone business in the early 1970s after Litton became AT&T's leading competitor in the supplying of switchboards and smaller-office phone systems. AT&T argues that Litton failed because of its own mismanagement and its inability to compete.
Litton lawyers today called both Cary and former AT&T chairman John DeButts to try to show that AT&T tried to stop IBM from entering the telephone business with its Caranation equipment. DeButts met twice with former IBM chairman Vincent Learson in 1972 and twice with Cary, once in 1974 and again in 1976.
Learson is scheduled to testify in the two-month-old trial next week.
DeButts said he could not remember the purpose of the 1972 meetings with Learson and said he did not even recall them "until they were brought to my attention" during pretrial investigations.
Cary and deButts differed in their recollections of the 1974 and 1976 meetings, however, although both said deButts exerted no pressure on IBM.
DeButts testified, for example, that his main recollection of the 1974 meeting was a concern on the part of Cary that AT&T would change its computer purchasing habits because IBM had decided to enter the satellite communications business to compete with AT&T there. He said at the 1974 meeting Cary mentioned IBM was not going to introduce the Caranation in the United States, a statement deButts conceded was unusual coming from a competitor (who was also a supplier).
But Cary said he did not remember mentioning the Carnation to deButts at either the 1974 or 1976 meetings -- both of which were held in downtown Manhattan only blocks from the federal courthouse here. Cary said the prime purpose of the 1974 meeting was a "courtesy" visit, to tell deButts face-to-face what IBM already had announced about its satellite plans.
Cary said that in 1976 he had been getting reports from "our sales organization" that IBM was losing AT&T business because of antagonism on the part of AT&T management to IBM. "Some of it was coming from former IBM employes" who in 1976 were part of AT&T management.
DeButts said he thought that Cary came to see him in 1976 to discuss further aspects of the satellite project. By 1976, IBM had joined with two other partners -- Aetna Life Insurance and Communications Satellite Corp. -- in the venture. Cary said that the satellite project may have been discussed but that he remembered talking mainly about possible resistance to buying IBM equipment on AT&T's part.
Both deButts and Cary testified that there were no antitrust implications in either discussion, although deButts said he talked to his lawyers after both meetings, because he is "sensitive to the antitrust laws," and informs the company's legal officials any time he has a meeting of that type with a competitor.
Litton's chief lawyer William Simon asked why in 1975 when deButts met with Harold Geneen, then chairman of International Telephone & Telegraph Corp., deButts said that he did not consider ITT a competitor in the phone business and that the meeting had to do with an ITT's desire to sell a new type of switch to AT&T.
Simon asked why he did not inform legal officials of a 1972 meeting with Robert Sarnoff, then chairman of RCA Corp., because RCA makes competing telephones.
"I went to talk to Sarnoff about the Boy Scouts," deButts replied.