1956 United States vs. IBM Corp Consent Decree

On January 21, 1952, the Government alleged that IBM had monopolized, attempted to monopolize and restrained trade in the tabulating industry, in violation of Sections 1 and 2 of the Sherman Act. Among other things, the Complaint alleged that IBM only leased, and refused to sell, tabulating machines. Through its lease agreements, IBM allegedly: charged lessees a single price for machine rental and repair and maintenance; limited machine uses; restricted attachments to, alterations in, or experimentation with such machines; and required grant backs of any inventions resulting from a breach of the prohibition on experimentation. By 1955, IBM had adopted the same lease-only strategy with respect to computers.

On January 25, 1956, the Court issued a Final Judgment (consent decree). The primary purpose of the decree was "to establish in the United States a used machine market" to compete against IBM's new computers.  Section IV implements this purpose by requiring that IBM sell as well as lease its computers. The other decree provisions generally were intended to reinforce the sale requirement. For example, the decree encouraged the development of an independent repair and maintenance service industry to support the used equipment market. An unanticipated consequence of the decree was the development of computer lessors that competed with IBM in financing.

Click here for the text of the Consent Decree ...

On January 17, 1969, the Justice Department filed a complaint for the case U.S. v. IBM. 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.

On May 19, 1975, the trial of U.S. v. IBM began and spanned a period of over six years.

On January 8, 1982, the case was withdrawn by William F. Baxter, assistant attorney general in charge of the Antitrust Division, Department of Justice. Baxter signed a Stipulation of Dismissal that stated the government's charges were “without merit.” It was later discovered that Baxter had failed to disclose that he had been retained as a consultant to a West Coast law firm defending IBM in private antitrust cases.

On August 13, 1982, IBM petitions for a writ of mandamus directing Judge David N. Edelstein of the United States District Court for the Southern District of New York to "conduct no further proceedings of any kind whatsoever with respect to the parties and issues in the case of United States v. International Business Machines Corp., 69 Civ. 200 ( (S.D.N.Y. filed January 17, 1969) )," and to vacate certain orders he has entered "requiring the parties ... to preserve documents." Alternatively, IBM seeks for the second time an order from this Court directing Judge Edelstein to recuse himself from further proceedings.

Click here for the text of the petition for writ of mandamus...