U S V Gte Corp

Facts: The case was filed on May 4th, 1983 challenging GTE’s acquisition of Southern Pacific Company. The challenge was made on the grounds that GTE’s acquisition violated Sections 7 and 15 of the Clayton Act and section 4 of the Sherman Act. The day the case was filed GTE proposed a consent decree that would settle the case. The decree had 7 main points:

(1) GTE's local monopoly operations must be kept separate from its long distance and other competitive operations;

(2) The GTE Operating Companies 5 may not discriminate among interexchange carriers and they must provide equal access to all competitors on a phased-in basis;

(3) The GTE Operating Companies may not provide interexchange services, they may not own facilities used to provide such services, and they must phase out their interexchange operations currently offered in conjunction with AT & T;

(4) For a period of ten years, GTE may not acquire any other firm providing interexchange telecommunications services;

(5) The GTE Operating Companies may not provide information services except through separate subsidiaries and subject to a number of limitations;

(6) In the event that GTE violates the decree, the Department of Justice may return to the Court to seek further relief; and

(7) The Court retains jurisdiction to construe, modify and enforce the terms of the decree.

Applied Laws: Section 4 of Sherman Act; Section 15 Clayton Act; Section 7 of Clayton Act;

Question: Does the consent decree purposed by GTE to the Department of Justice serve the public interest?

Judgment: The Court found that the consent decree proposed by GTE was in the public’s interest, would foster competition, and would not create a monopoly. The Court stated that GTE was simply not as large as AT&T and therefore did not present the same danger and threat to public interest that AT&T had.

Significance

The United States v. GTE case was filed only a year after the divestiture of AT&T, meaning the opponents of the GTE consent decree, which would effectively keep GTE under constraints to avoid becoming a monopoly, were demanding nothing short of complete separation, which would protect competition. The decision reached that GTE was not a threat to consumer interests or fair competition has been viewed by some parties as inconsistent with AT&T.

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