The Supreme Court yesterday upheld the antitrust settlement that broke up the American Telephone and Telegraph Co. over the objections of 13 states concerned about the impact of the AT&T divestiture on local telephone service.
The court's action summarily affirmed U.S. District Judge Harold Greene's approval of the historic January 1982 divestiture agreement and allows detailed planning of the reorganization to continue under Greene's supervision without interruption.
Thirteen states, including Maryland, asked the Supreme Court to review the settlement. The states said that divestiture will require major changes in the financial condition of the local operating companies, as well as the equipment and other assets under their control--all of which could affect the rates they charge consumers.
State regulatory agencies, like the Maryland Public Service Commission, have the right to approve or disapprove any such changes, said Charles O. Monk, chief of the antitrust division in the Maryland attorney general's office.
Three justices, one short of the four required, voted to review the settlement. That tally and the written dissent accompanying it yesterday suggested that the court may be inclined to review some of the antitrust issues involved in the AT&T divestiture in some subsequent case.
The three dissenters, Justices William H. Rehnquist and Byron R. White and Chief Justice Warren E. Burger, strongly questioned the constitutionality of having the federal judiciary review such settlements.
The Justice Department told the court that the federal court action approving the settlement, like any other federal court decision, preempts the states' authority. The states, like everyone else, have an opportunity to file objections to a settlement with the reviewing federal judge, the government argued.
The Supreme Court also rejected objections to the agreement from two AT&T competitors, the Tandy Corp. and the North American Telephone Association, concerning provisions for the sale of telephone equipment contained in the settlement.
The justices acted without full oral arguments, briefings or an opinion. The three dissenters urged a full review by the court.
Rehnquist said he was "troubled by the notion that a district court, by entering what is in essence a private agreement between parties to a lawsuit" can use the powers of the federal goverment "to preempt state regulatory laws." He said the district court "may well be correct," but "I am not prepared to create a precedent in this court by summarily affirming its decision."
In addition, the dissenters raised questions about the constitutionality of the law (The Tunney Act) that requires approval of the federal courts for such a settlement, saying the pros and cons of a negotiated agreement are policy matters reserved to the executive branch.
AT&T is working under a deadline of Feb. 24, 1984 for the breakup of the Bell System. It will be giving up its 22 local telephone companies in exchange for expanded rights to compete in unregulated areas, such as data processing.
The states that sought Supreme Court review were, in addition to Maryland, Arizona, Delaware, Missouri, New Hampshire, North Carolina, Tennessee, Wisconsin, Virginia, Alabama, Kentucky, West Virginia and South Dakota.