Texas Officials Decide Not to Investigate Baby Bells

The Texas attorney general’s office said Wednesday that it would not investigate whether regional Baby Bell telephone companies conspired illegally to suppress competition.

In a letter sent to Bell rivals that sought the probe, Assistant Atty. Gen. Mark Tobey said a preliminary inquiry failed to turn up enough evidence to warrant a formal investigation.

Five telephone service providers and trade groups had urged an inquiry into whether the Bells violated Texas law by allegedly arm-twisting their suppliers to join a $40-million lobbying campaign and by dividing market territories to avoid competing against one another.

Texas was one of nine states, including California, where Bell rivals sought antitrust investigations into activities stemming from an Oct. 20 dinner meeting in Washington.

Walter B. McCormick, president of the U.S. Telecom Assn., which put on the meeting, said he hoped the rivals and their trade groups would now abandon their “cynical, well-funded campaign of innuendo and frivolous claims.”

The antitrust issues arose after the Los Angeles Times published details from an internal USTA memo about the dinner attended by Bell chief executives and their counterparts at such telecommunications equipment makers as Intel Corp. and Motorola Inc.

At the meeting, USTA sought financial support from the manufacturers for a three-year lobbying campaign to end price regulation in the industry.

McCormick said the continuing demand for investigations -- rivals asked for probes in Connecticut and South Carolina this week -- “is meant to harass and intimidate” and was wasting the time of public officials.

Although companies are forbidden by antitrust laws to set prices for goods and services, they can meet to further common public-policy goals. Competitors contend that the Bells used the exception as a cover to work out a way to raise prices.

The rivals and their trade groups have asked Senate and House judiciary committees as well as nine state attorneys general to investigate the Bells.

House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.) has said he believed the Bells’ conduct was protected by the 1st Amendment, and he had no plans to call a formal inquiry.