The judgment against American Telephone & Telegraph Co. on sweeping antitrust charges late Friday and the award of $1.8 billion in damages to MCI Communications Corp. is expected to have significant ramifications for the telephone giant and the nation's entire communications industry.
Although AT&T officials insist the verdict will be overturned on appeal the decision clearly gives momentum to the Justice Department's suit to break up AT&T. It could slow legislative efforts to revamp communications regulations and may provide encouragement to companies seeking to challenge giant firms in other industries.
"This decision says to people that you can fight arrogant corporate power," said William McGowan, MCI's chief executive. "They can't grind you to death with their deep pockets. You can fight the wealthy."
On the other hand, an AT&T official said the decision indicates that juries cannot handle complex economic cases and may have an inherent bias against large companies.
"The decision shows a basic preference for David over Goliath," said Harold Levy, general solicitor of AT&T. "It confirms the views of commentators that juries are not capable of digesting, handling and assimilating information and coming up with a really fair conclusion from complex economic data."
Levy said the Bell System will present motions to overturn the verdict and the damage assessment within 30 days. He said that "some of the jury instructions were prejudicially erroneous," and that rulings on the admissibility of evidence for both sides were incorrect.
"I don't regard this as the final judgement in any sense," Levy said. "We're not paying this obscene amount, and I'm sure we will never pay this amount or anything resembling it."
The suit, brought by MCI in 1974, charged that AT&T, through a variety of policy actions and decisions at the highest levels of the company, used its virtual monopoly over almost all local telephone service to prevent the growth of MCI.
MCI, a firm based in the District, provides long distance telephone service to business and residential customers, serving a network of 65 cities.
The suit was filed in Chicago because MCI had sought to first challenge AT&T's monopoly in long distance telephone service in the Chicago-St. Louis market. MCI had received authority from the Federal Communications Commission in 1969 to provide such service.
But the company charged in its lawsuit, with the jury ultimately agreeing, that MCI was unfairly denied access to specialized long-distance calling services and other hookups that firms like MCI need to use to link with local telephones.
The jury, in finding AT&T guilty of 10 of 15 allegations presented, concluded that AT&T negotiated with MCI about the services in bad faith, disconnected already hooked-up lines, filed unfair state tariffs rates and price-cutting practices in violation of federal antitrust law.
MCI had asked for a $900 million damage award, claiming that the AT&T actions had stunted the growth of the firm's fledgling service.
The jury voted to award MCI $600 million in damages, believed by antitrust experts to be the largest in history. Such an assessment in antitrust cases of this kind is tripled. The jury did not disclose why it choose the amount, although AT&T's Levy suggested it was a simple calculation based on two-thirds of the claims under consideration.
Nevertheless, the implications of the decision, which came after less than two full days of jury deliberation, stretch far beyond U.S. District Judge John Grady's Chicago courtroom, where since February the often dramatic, but frequently tedious case was presented.
Gerald Connell, chief prosecutor of the Justice Department's antitrust suit against AT&T, said the decision will surely boost the morale of the government's litigating staff. "We're certainly much happier than if it went the other way," he said. "It will make everybody feel very good on our side, and I'm sure there won't be many smiles when we meet with their lawyers Monday."
Another high-ranking government official said the MCI verdict underscores and affirms many of the allegations in the Justice Department case -- and will make it difficult for the government to settle the case out of court on terms that AT&T might accept.
"This is genuinely going to change the environment for everybody involved in the industry," the source said. "People are going to have to be awfully circumspect in using monopoly power this way."
Coincidentally, the decision came during a moment in congressional consideration of legislation that would revamp the federal regulatory apparatus overseeing the telecommunications industry.