General Dynamics Corp., using information developed by the federal government in its antitrust attack on American Telephone & Telegraph Co., yesterday sued AT&T for "many millions of dollars" on charges that it maintained an illegal monopoly in the sale of telephone equipment for a dozen years.
The 31-page suit accused AT&T of violating the Sherman Antitrust Act by "consciously, intentionally and unreasonably" using its control over the national network of telephone lines to keep what was then a subsidiary of General Dynamics, Stromberg-Carlson Corp., from selling telephone equipment to consumers and to individual Bell System companies.
General Dynamics claimed multimillion-dollar damages and said the exact figure must be determined after a jury trial. General Dynamics is seeking triple damages from AT&T.
The General Dynamics suit, filed in U.S. District Court in Chicago, is one of several antitrust attacks on AT&T, which is in the process of splitting off its 22 local operating units and its equipment supply functions. The giant company, once the world's largest corporation, is taking these steps as a result of the settlement of the government antitrust suit against AT&T approved by U.S. District Judge Harold Greene of Washington.
Although that suit was formally dismissed by Greene after the settlement was reached, General Dynamics said its case is based partly on the government's complaint that AT&T was engaged in an "unlawful combination and conspiracy to monopolize."
AT&T lost an earlier antitrust suit filed by MCI Communications Corp. in Chicago charging it with conspiring to keep MCI out of the private long-distance business by refusing hook ups to local subscribers. MCI won a record $1.8 billion verdict, but the case is being appealed. A similar case brought by Southern Pacific Communications Corp., however, was decided in AT&T's favor last week by U.S. District Judge Charles R. Richey in Washington.
Yesterday's suit by General Dynamics differs from the MCI and Southern Pacific cases in that it attacks AT&T's control of telephone equipment for consumers and the local Bell operating companies.
Before 1968, General Dynamics said, AT&T forced subscribers to lease equipment from its subsidiaries on the grounds that the use of other equipment would damage the national telephone network. "Defendants [AT&T] knew this assertion was false," General Dynamics asserted.
After a 1968 ruling by the Federal Communications Commission allowing other companies to sell telephone equipment to users, General Dynamics charged that "in order to suppress the competition" AT&T insisted a special device be used to connect its lines to telephone equipment made by outside firms. This rule remained in force for 10 years.
General Dynamics' efforts to compete successfully in the equipment market "were frustrated by the barriers created by the defendants' [AT&T's] illegal interface device requirement, defendants' discriminatory prices and services and . . . other practices," the suit charged.
These included "substantial" installation fees and rental charges for the interface devices, which Bell equipment users did not have to pay.
Further, the suit charged AT&T with blocking General Dynamics' efforts to sell equipment to the Bell System, which made 90 percent of its purchases from another subsidiary, Western Electric, and used the General Dynamics firm "only in rare, emergency situations."
General Dynamics sold the telephone switching equipment and some other operations of its Stromberg affiliate last July to United Technology Corp. and the rest of the firm in October to Comdial Telecommunications Inc. But General Dynamics, a major defense contractor based in St. Louis, retained the right to file the antitrust suit and keep any proceeds.