The Reagan administration's top antitrust official warned yesterday that the Justice Department would restart its massive antitrust suit against American Telephone & Telegraph Co. if the courts tried to alter the terms of its settlement with the communications giant.
William Baxter, assistant attorney general for antitrust, told a congressional hearing that he is prepared to resume the case if U.S. District Judge Harold Greene finds that the settlement, which calls for the divestiture of 22 local AT&T phone companies, is not in the public interest.
It was the first time Baxter has suggested that the case would begin again if Greene rejected the settlement terms. Following such a move, "we would resume litigation of the 1974 case," Baxter told a joint hearing of House Commerce and Judiciary subcommittees.
And Baxter said that since the government and AT&T had agreed on Jan. 8 to dismiss the 1974 case "without prejudice" as part of the settlement, Greene could not himself resume the litigation.
Baxter's remarks came in a climate of growing concern about the agreement both in Congress and at the Federal Communications Commission. Two internal FCC documents reveal some anxieties about the settlement and particularly the FCC's role in monitoring it.
FCC member Joseph Fogarty, regarded as one of the commission's leading telecommunications experts, wrote that although the pact might be a "reasonable and proper private accord," it cannot "oust, supplant or modify" the FCC's authority under existing law.
"Indeed," he added in a memo to FCC members, "in cases of irreconcilable conflict, it is the antitrust law which must yield to this commission's broader regulatory jurisdiction."
Meanwhile, the agency's common carrier bureau said there may have to be legislation or modifications to the decree to make sure local ratepayers are protected.
For example, the bureau said in a 116-page document, some modification may have to be made to make sure AT&T reimburses local ratepayers for new products that have been under research and development during the past several years with money from the local ratepayers.
The bureau also argues that with the settlement, legislation was needed now more than ever to give the FCC authority over intrastate long-distance rates as well as interstate rates.
In Congress, Baxter faced aggressive questioning yesterday from House members concerned about several issues in the AT&T settlement, most notably the fate of the billion-dollar annual revenues of the Yellow Pages directory and the future of vital patents from Bell Telephone Laboratories.
Rep. Timothy Wirth (D-Colo.) pressed Baxter on both issues, citing "ambiguities" between Baxter's statements and congressional testimony earlier this week by AT&T Chairman Charles Brown.
Under the pact, AT&T would keep the Yellow Pages and the local companies would lose revenues that keep local rates down. Brown pledged Monday to maintain the revenues in the local phone companies during a four-year transition period.
Baxter said the local companies, under the settlement, would retain the piece of the Yellow Pages mechanism which makes it so valuable--a machine-readable listing of local business telephones. The companies will be "in a position to auction it off to the highest bidder, which may or may not be the AT&T Co."
"In a sense all the Yellow Pages do go to AT&T, but one must not lose sight of the fact that all the supercompetitive profits remain with the" local companies, Baxter said.
On the even more complex patent issue, Baxter said provisions of an earlier decree required mandatory licensing of AT&T patents, products such as valuable semiconductors, would expire when the new decree takes effect.
Wirth expressed concerns that Brown had suggested existing rights to those patents might be wiped out, although Baxter said such a change would only apply to new applications for their use or for new Bell patents themselves.
For the first time, Baxter told Congress that legislation might be necessary during the four years the divestiture plan is carried out to prevent the possibility of AT&T using revenues from regulated activities to fund competitive ventures, such as its data processing activities.
AT&T could enter the computer business for the first time under the pact. "I see a possible problem during that period," he said.
Also arising publicly for the first time are concerns about Baxter's apparent unwillingness to comply with House document and interview requests. Baxter said he would, for example, poll the International Business Machines trial staff about their views and would provide Congress with his own summaries of staff documents.
But, Baxter said that he would not give Congress authority to interview anyone other than political appointees about the process or the case, claiming that the questioning could lead to inhibiting later Justice Department deliberations.