The Monster Case

What has digested 50 million pieces of paper, chewed on 500 witnesses and has 38 legs? Answer: the rival teams of lawyers appearing in court to argue the Government's mammoth IBM antitrust suit. The largest such case ever to go to trial in the U.S. finally got under way in a New York federal district court last week, even bringing the usually officebound IBM chairman Frank T. Gary in to watch the opening session. Already, critics contend that the main thing the trial will prove is that the antitrust laws have become so complex to enforce in a modern economy that they are of little use in curbing business giantism.

The issues, to be sure, are important enough. One is a constantly vexing problem of antitrust law: how to define what "market" is involved. Raymond Carlson, 52, the Justice Department's chief lawyer for the case, contends that IBM controls a dominant 70% of the market for general-purpose computers and related equipment. IBM lawyers, led by Manhattan Attorney Thomas Barr, 44, and former Attorney General Nicholas deB. Katzenbach, reply that the true market in which the company competes is the much broader one for all kinds of electronic data-processing equipment, and that in any case a 70% share has not constituted a monopoly in previous cases.

Another issue:. How did IBM achieve its pre-eminent position? The Government says it used predatory tactics. Barr retorted in court last week that the company's success resulted simply from "better products, greater productive efficiency, better service, right judgments about the future at key periods of time and the willingness [of management] to back those judgments." To support its claim that its triumphs have been based on quality, IBM is likely to call as witnesses purchasing agents of its biggest (between $4 billion and $6 billion annually) customer: the U.S. Government itself.

The most impressive aspects of the case, however, are its complexity and the time it is consuming. Pretrial discovery proceedings took more than six years, during which a special crew had to assemble six sets of 60,000 key pages (two sets each for the court, IBM and the Government) and wound up delaying the trial for months when they bollixed the copying and collating. Chief Judge David N. Edelstein figures that the nonjury trial will end sometime in 1976, and it might take him another year to reach a decision. Appeals could carry the case into the 1980s. And then, should IBM be judged a monopoly, comes the question of what to do about it. Government lawyers have asked the court to break up IBM but have not yet specified into how many companies of what size. In the event of a Government victory, wrangling over such questions will also add to the timetable.

Meanwhile, markets may change.

The Government has already filed two previous suits to trim IBM. Judge Edelstein supervised the 1956 settlement of the last such case and ruled that IBM should divest itself of or reform much of its electric accounting-machine division. But by then the business had changed so radically that IBM already was voluntarily moving out of such machines. The Government, says Washington Lawyer C. Jack Pearce, "had to sue the third time because the first two times didn't do it--whatever it was they were trying to do."

Because of the complexities and enormous time delay, says Democratic Senator Frank Church of Idaho, monopoly laws "are only an empty gesture now." Yet few alternatives are in sight. Two reforms suggested by some lawyers and politicians are 1) cutting down on legal battling by giving a tax break to company shareholders if they agree to a Government-sought divestiture; and 2) eliminating antitrust trials entirely by having Congress legislate divestiture for specific industries. Whatever the merits, neither course seems likely of adoption, at least not without a battle as long as a major antitrust trial.

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