A group of alarm system companies has filed an antitrust suit against American Telephone & Telegraph Co., charging the company and three one-time top executives of AT&T and its American Bell Inc. subsidiary with conspiring to monopolize the alarm business.
An attorney who filed the suit said the alarm companies would seek $200 million in damages. The suit was filed in U.S. District Court in Washington last week by 42 companies in the alarm field who distribute products under the umbrella of Sonitrol Security Systems.
At the heart of the suit is the charge that AT&T set out to raise rates for the private telephone lines needed for the alarm business in order to limit competition in that growing field. This so-called "migration" strategy is alleged to have forced alarm service customers to use AT&T's alarm services by making the private lines the competitors require inordinately costly, the suit charges.
The suit alleges that a summary of a Bell System planning meeting in Texas in 1979 spelled out that rate strategy. The suit cites notes of the AT&T meeting as saying, "Ask for more, you get more!"
AT&T has "entered into restrictive agreements" to "restrain" the competition's business development and "migrate plaintiff's present and prospective customers" to AT&T alarm systems and services, the suit charges. The suit alleges those actions constitute violations of the Sherman Act.
Named as co-conspirators in the suit are Archie J. McGill, the controversial former chief of American Bell's business products group, who left the company in June to move into the venture capital business; Charles F. Hugel, a former AT&T vice president, and Dennis J. Sullivan, a former American Bell official now with Cincinnati Bell Inc.
"We view this action as being completely without merit," said Paula Horrii, district manager of media relations for AT&T in New York.
The companies under the Sonitrol umbrella operate audio alarm systems in 21 states. These systems depend on telephone lines to relay monitored detection signals on customer sites.
For the most part, AT&T had been precluded from direct participation in that business under the restrictions of a 1956 consent decree with the Justice Department. That decree was lifted last year under terms of the company's antitrust settlement with the Justice Department. In June of this year, the company announced its own plans to offer similar services.
According to the suit, AT&T has been developing these plans since soon after 1974, when AT&T marketing studies showed that 87 percent of all phone users wanted an alarm system. As a result, Bell Laboratories, Western Electric Co. and later American Bell, the AT&T marketing arm, have been developing a strategy for entering the potentially lucrative alarm field.