DeLamarter, Richard Thomas

International Business Machines Corporation (IBM) became a giant in the field of electronic data processing by the mid-1950s after having achieved great success in the punch-card tabulating machine business in the 1930s. IBM had an image as offering superior products at a lower price than their competitors. IBM customers were portrayed as loyal and satisfied with the service provided by "Big Blue."

IBM's success, particularly with their System/360, was a cause for distrust and suspicion by both their competitors and the federal government. Preliminary inquiry was made in the mid-1960s by the U.S. Department of Justice as to antitrust violation by IBM. The complaint for the case U.S. v. IBM was filed in U.S. District Court, Southern District of New York on January 17, 1969 by the Justice Department. The suit alleged that IBM violated Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business.

There were several charges against IBM. The government contended that IBM planned to and did eliminate emerging competition that threatened the erosion of IBM's monopoly power by devising and executing business strategies which were not illegal, but which did not provide users with a better price, a better product or better service.

The trial began May 19, 1975 and spanned a period of over six years. After thousands of hours of testimony and the submission of tens of thousands of exhibits, the case was withdrawn by William F. Baxter, assistant attorney general in charge of the Antitrust Division, Department of Justice, on January 8, 1982. Baxter signed a Stipulation of Dismissal that stated the government's charges were "without merit."

Baxter had reviewed the case and met with both sides in 1981. His reasoning for dismissing the case was that the Antitrust Division's view regarding Section 2 violations had evolved since the commencement of the suit; the government was backing off antitrust actions. He believed that the cost of continuation would be too high and that the government was unlikely to win the case. Baxter maintained that IBM had achieved its large market share legally without resorting to predatory practices, and that Section 2 could not be filed against a company because of its success.