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Rivals Seek Probe of Bell Lobby Tactics

Group asks Lockyer to investigate possible antitrust violations in courting of suppliers.

November 26, 2003|James S. Granelli | Times Staff Writer

A trade group for Baby Bell rivals asked state Atty. Gen. Bill Lockyer on Tuesday to investigate possible antitrust violations in the Bells' efforts to win suppliers' support for a $40-million lobbying campaign, which is aimed at ending pricing regulations.

The California Assn. of Competitive Telecommunications Companies, or CalTel, wants Lockyer to determine whether SBC Communications Inc., California's dominant local carrier, and other Bells engaged in illegal arm-twisting under state antitrust laws to try to get equipment manufacturers to join the lobbying effort.

The issue arose after The Times published details from a memo about an Oct. 20 dinner meeting between Bell chief executives and their counterparts at Intel Corp., Siemens USA and other vendors.

"A number of manufacturing victims of that arm-twisting event are headquartered in California, and two [Bell companies] have significant business in California," said CalTel Chairman John Sumpter, an executive at Pac-West Telecomm Inc. in Stockton. He said that California had strong antitrust laws and an attorney general who wanted to pursue antitrust cases.

Tom Dresslar, Lockyer's press aide, said the office would review the request and then decide how to proceed.

The U.S. Telecom Assn., the trade group for the Bells, declined Tuesday to address the allegations in the letter. The group organized the dinner, and its president, Walter B. McCormick Jr., wrote the memo about the lobbying campaign.

In its letter, CalTel pointed out that the Bells said in the memo that they already had launched a grass-roots initiative that took advantage of their "size and market strength." The Bells wanted the manufacturers to "unite with us and commit as well."

"This clearly collusive effort by the Bell monopolies could have a damaging impact on the California telecom economy," the CalTel letter states.

The trade group said the investigation should determine whether a "Bell cartel" violated state laws, eroded price competition in the state and harmed the California telecommunications market.

The Bells' trade group has said previously that prices and costs were not discussed at the meeting. It denied that it had violated antitrust laws.

Suppliers, through their trade group, the Telecommunications Industry Assn., have decided to remain neutral in the Bells' battle with the White House, Congress and regulators. The manufacturers, who also sell to Bell competitors, were not comfortable with the pressure from the Bells.

"There is some concern among members about possible antitrust issues," TIA President Matt Flanigan said.

Early this month, 22 rival firms and two trade groups asked Senate and House Judiciary committees to open an investigation. The House committee's chairman, Rep. F. James Sensenbrenner Jr. (R-Wis.), said he believed the Bells' conduct was protected by the 1st Amendment, and he had no plans to call a formal inquiry, spokesman Jeff Lungren said. The committee's ranking Democrat, Rep. John Conyers Jr. of Michigan, already has called for an inquiry.

The Senate still is considering the request, spokeswoman Margarita Tapia said.

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