The American Telephone & Telegraph Co. has offered three times to divest itself of assets totaling up to $20 billion in an effort to settle antitrust problems with the government but the Reagan administration has agreed to drop the massive antitrust suit under terms that would keep the company intact, according to U.S. documents.
The current effort to scrap the case appears to be part of a broad effort to reverse the antitrust policy of that two previous administrations.
The AT&T case is considered the most significant antitrust suit ever brought by the Justice Department and efforts to abandon it, under terms that would not alter AT&T's basic structure, would send a clear signal to American business about the new policy thrust.
A report prepared by the Reagan administration's telecommunications task force, obtained by The Washington Post, shows that on three different occasions AT&T has agreed to a settlement of the case that would have resulted in a substantial breakup of the telephone giant. Company officials have repeatedly told the courts and Congress that any divestiture of AT&T would jeopardize the viability of the nation's telephone system.
Revelation of the terms put forth by AT&T in earlier settlement talks sheds new light on the administration's eagerness to end the litigation. Assistant Attorney General for Antitrust William Baxter asked U.S. District Court Judge Harold Green Wednesday for an 11-month delay in the case in an effort to improve prospects for congressional approval of amended telecommunications legislation the administration claims would solve AT&T's antitrust problems. Baxter said the administration would drop the antitrust suit if Congress enacted the legislation. Greene denied the request for a delay.
According to the task force report which has been the basis for Reagan administration policy on the issue, AT&T first proposed a settlement to the Carter administration in 1977. The proposal involved the divestiture of Western Electric Co., the AT&T manufacturing arm. That plan would have split off the telephone company's residential and commercial equipment business.
In addition, AT&T would have created a new company for some long distance services, which would have been divested "if subsequent anticommpetitive abuses were shown," the report said.
Two years later, according to the report, AT&T attorneys agreed to a proposal divesting the company of an equipment subsidiary, three or more of the company's 23 local telephone companies, and possible a third unit for long distance services. This settlement plan would have "entailed the divestiture of assets possibly exceeding $20 billion," the report said. Both of these settlement proposals were rejected by the Justice Department during the Carter administration.
Finally, last December AT&T and the outgoing Carter officials "tentatively agreed" to settle the case by creating a new AT&T subsidiary to market competitive communications services and by breaking off three of the local phone companies. "Apparently uncertain of the effect or purpose of the settlement," Baxter recommended against accepting the terms, the report stated.
Since the House Judiciary Committee blocked telecommunications legislation passed by the House Commerce Committee last year, the task force, in a conclusion in which Baxter now concurs, said in the report that no bill could pass as long as the antitrust suit against AT&T continued.
"Legislation is unlikely to be enacted absent some resolution of the ongoing AT&T antitrust case," the report concluded. But House leaders, including Rep. Timothy E. Wirth (D-Colo.), chairman of the telecommunications subcommittee, and Rep. Peter W. Rodino Jr. (D-N.J.), chairman of the Judiciary Committee, have rejected that conclusion.
Mark Sheehan, spokesman for the Justice Department's antitrust division, said yesterday that in light of Greene's refusal to delay the case, the trial would go forward next week, with AT&T beginning presentation of its defense.
But Sheehan said that if Congress passes the telecommunications bill with the proposed amendments "it would be satisfactory to the administration and we would see no readon to pursue the matter in court." Baxter is planning to propose two amendments to the bill, one dealing competition in the equipment business and the other with long distance markets.
Nevertheless, many sections of the antitrust division remained in turmoil yesterday as lawyers working on the AT&T case expressed confusion about the administration position.