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 violations 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 the 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. Specifically, it was alleged that IBM had hindered the development of service and peripherals competitors by maintaining a single price policy for its machines, software and support services (bundling); it had granted discounts for universities and other educational institutions and by so doing influenced those places to select IBM computers; and that IBM had introduced underpriced models knowing that they could not be produced on time and did this to prevent the placement of competitors' machines. For example, IBM had prematurely announced new systems such as System/360 claiming that it was a superior product and that its introduction was imminent when in fact, it was several years from completion.

The trial began May 19, 1975 and spanned a period of over six years. After thousands of hours of testimony (testimony of over 950 witnesses, 87 in court, the remainder by deposition) and the submission of tens of thousands of exhibits, the case was withdrawn by William F. Baxter, assistant attorney general in charge of the Antitrust Division, Department of Justice, on January 8, 1982.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.” 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.

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. Baxter 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 filed against a company because of its success.

Much has been written about U.S. v. IBM including books by those who participated in the case for both the plaintiff and the defendant. Folded, Spindled, and Mutilated: Economic Analysis and U.S. v. IBM (Cambridge, MA: The MIT Press, 1983) written by Franklin M. Fisher, John J. McGowan, and Joen E. Greenwood, presents IBM's side of the story. Fisher was an economic consultant and witness for IBM and the book is based on his testimony in the case. Fisher was also co-author of IBM and the U.S. Data Processing Industry: An Economic History (New York: Praeger Publishers, 1983) with James W. McKie and Richard B. Mancke. McKie and Mancke were also economic consultants and witnesses for IBM in the antitrust suit. Richard Thomas DeLamarter, a senior economist for the Department of Justice on the case from 1974-1982, is the author of Big Blue: IBM's Use and Abuse of Power (New York: Dodd, Mead & Company, 1986). He believed that Baxter wrongly dismissed the case and that IBM was, and continues to be, a monopolist. DeLamarter used records from the case, particularly plaintiff's exhibits, to substantiate his arguments. DeLamarter donated these records to Hagley Museum and Library in 1989.

The case has generated discussion about the length of the litigation and the wisdom of withdrawing the case prior to judicial determination. Was the public properly served? U.S. v. IBM raises many questions about the conduct of the case and its dismissal, and IBM's continuing dominance in the computer industry.

The IBM Antitrust Suit Records were collected by Richard Thomas DeLamarter, who donated the records to Hagley Museum and Library in 1989. DeLamarter, author of Big Blue: IBM's Use and Abuse of Power (New York: Dodd, Mead & Company, 1986), worked for the Justice Department as a senior economist from 1974-1982 on the antitrust case U.S. v. IBM. The Justice Department's Antitrust Division filed suit against IBM in January 1969 and the case lasted until January 1982 when it was dismissed by William F. Baxter, assistant attorney general in charge of the Antitrust Division. The records for Accession 1980, almost all photocopies, measure 40.5 linear feet and encompass the years 1950 through 1984. They were not in any specific order and many of the papers were in notebooks or binders. The arrangement was determined by type of record or company that generated the record for series and sub-subseries when processing the collection.

Since the IBM case lasted almost thirteen years and centered around the question whether IBM had monopolistic control of the computer industry, it generated a rich collection of material. The records in Accession 1980 show the evolution of the computer industry, particularly the role played by IBM and its development of computer systems (specifically System/360), software, and its drive to maintain market share.

The IBM Antitrust Suit Records are arranged in nine series as follows:

Series I. Exhibits, 1950-1981 (bulk dates 1964-1979), 19 linear feet. The series is divided into five subseries containing exhibits for U.S. v. IBM and includes: Plaintiff's Exhibits (PX) (1950-1981, subseries 1) which is the largest subseries; Defendant's Exhibits (DX) (1958-1979, subseries 2); Joint Exhibits (JX) (1964-1980, subseries 3); Court Exhibit (1975, subseries 4); and Exhibit Indexes (1934-1981, subseries 5). Within the first four subseries, records are arranged by exhibit number. The type of material represented by the exhibits, particularly the plaintiff's exhibits, is diverse and includes records generated by IBM and its executives including internal memos, speeches, executive office correspondence, appointment diaries of Cuthbert C. Hurd (former IBM director of applied sciences in the early 1950s and later consultant to IBM), product announcements, and 10-K financial forms. There are also IBM handbooks and manuals on principles of time sharing, basic principles of COMSTAT, and an IBM Lease/Purchase Guide. The studies and reports, many prepared by IBM's Data Processing Group (DPG), cover such subjects as selective pricing, market share and environment, System/360, unbundling, and rental and purchase policies. Some reports analyze IBM's competitors in the computer industry including Honeywell, RCA, Burroughs, General Electric, as well as several leasing and software companies. Other plaintiff's exhibits include computer industry reports and studies by companies such as International Data Corporation, Arthur D. Little, Inc. and the Diebold Group; and records generated by IBM's competitors such as Storage Technology Corporation, ITEL, General Electric, and RCA. The exhibits in this accession are not a complete set; however, the plaintiff's exhibits are more complete than the defendant's, joint, and court exhibits.

Series II. Testimony and Transcripts, 1977-1981, 2.25 linear feet. Direct Testimony (1980-1981, subseries 1) witnesses include: Franklin M. Fisher, Carl Kaysen, James W. McKie, and Richard B. Mancke, economic consultants for IBM; and Alan K. McAdams, chief economic consultant for the government. Corrected Court Transcripts (1977-1981, subseries 2) contains testimony of McAdams, Leonard W. Weiss, and Lee Egan Preston, economic consultants for the government; Arthur Northrup, an IBM financial executive; and Frederic G. Withington, economist, government witness, and author of many of the Arthur D. Little, Inc. reports and studies. Both the testimony and transcripts are incomplete and represent only a small portion of the amount produced by the case.

Series III. Legal papers: U.S. v. IBM, 1973-1982, 0.75 linear feet. Arranged chronologically, this series includes memoranda, motions, affidavits, briefs, opinions, complaints, answers, and petitions generated for the case by the plaintiff, defendant, and Judge Edelstein. These papers document such as topics as IBM seeking to recuse Judge Edelstein, IBM contesting the government's reopening of discovery, the government's economic analysis of the market for general purpose electronic digital computer systems, the plaintiff's statement of triable issues, and assistant attorney general Baxter's prior involvement as a legal consultant to IBM. Although this series is incomplete and is missing legal papers generated for the case, it is still useful for the researcher in tracing the legal proceedings of the case.

Series IV. Department of Justice Records, 1963-1982 (bulk dates 1978-1981), 5 linear feet. These records were primarily generated by or were used by the U.S. Department of Justice for the case. The three subseries are arranged alphabetically by subject or deponent; within each subject, chronologically by date of document. Findings of Fact (1981, subseries 1) are arranged alphabetically by subject. Findings were compiled by the economic staff at the Antitrust Division using transcripts, exhibits, IBM documents, testimony, computer industry studies, and narrative statements to strengthen the government's position that IBM was a monopoly in the prosecution of the case. Government economists examined such subjects as Memory Market Measurement and Evaluation, System/360, Financial Documents, Leasing Companies, Educational Allowance, Peripherals, Barriers to Entry, Bundling, and IBM's Anticompetitive Conduct. Additionally, the Findings analyzed the testimony of witnesses such as IBM executives (including Thomas J. Watson, Jr.; Thomas Spain; G.B. Beitzel; Hilary A. Faw; H. Dale Wyngarden; John R. Opel; and Eugene L. Kuykendall), economists (including Lee Egan Preston, Henry Rosovsky, Frederic Withington, and Frederick Scherer), and executives of IBM's competition (such as Laurence L. Spitters and John Navas, Memorex; Robert Dewey Schmidt and Edward E. Strickland, CDC; Stephen J. Jatras, Telex; James H. Binger, Honeywell; and John Weil, G.E.). Reports, Memos, Notes, Studies (1963-1982, subseries 2) is arranged alphabetically by subject/title. Many of the reports and studies were used as the basis for the Findings of Fact. The subjects are varied and most of those listed in subseries 1 are also included in subseries 2. Additional records that are of interest include: Appraisal of U.S. v. IBM and Analysis of IBM's Defense (both reports written by economists at the Department of Justice), William F. Baxter's Press Conference Transcript (January 1982), Briefing Book Rebutting Public Statements by IBM, IBM Memorandum and Appendices regarding Sessions with Department of Justice, IBM's Objections to Plaintiff's Exhibits, MIT and Forrester Patent, Plaintiff's Rebuttal Case (December 1980), Problematic Aspects of the Government's Economic Case, Questions for Witnesses, and Relief and Divestiture. Deposition Summaries (1971-1974, subseries 3) are summaries of witnesses' depositions for U.S. v. IBM and several other cases in which IBM was a defendant. The summaries include background information on the deponent's career, information on exhibits generated by or for the deponent, and a recap of the deponent's testimony.

Series V. IBM Records, 1962-1979, 3.5 linear feet. This series contains documents generated by IBM that were not listed as exhibits. The records are arranged alphabetically by title or type of document. They include IBM business conduct policies guide; company studies on International Computers Ltd. and Sperry Rand; Data Processing Division Administrative Terms; Greybooks containing data on various IBM computers; memos on market share, adjustments, remote computing strategy, data entry strategy, new applications for System/370, and fixed term plan; presentations to IBM board of directors; product announcements and prices; sales manuals; and information on assets and billings, product descriptions, leasing and manufacturing strategy. This series also contains IBM's Narrative Statement for the case prepared by economists Frank Fisher, James W. McKie and Richard B. Mancke. This Narrative Statement later became the basis for the book IBM and the U.S. Data Processing Industry: An Economic History.

Series VI. Computer Industry Reports/Studies, 1956-1980, 6.5 linear feet. The series contains reports and studies generated by computer consulting companies such as Arthur D. Little, Inc. (1956-1980, subseries 1); Diebold Group (1960-1978, subseries 2); and International Data Corporation (IDC) (1967-1980, subseries 3). Each subseries is arranged alphabetically by title. These reports and studies, not listed as exhibits, cover a wide variety of electronic data processing-related topics and contain information on memory, peripherals, leasing, maintenance, the market, disk drives, the computer industry, forecasts, and IBM products.

Series VII. Published Articles and Reports, 1959-1981, 1 linear foot. Arranged alphabetically by title, these articles and reports cover topics such as Japan's economy and Japanese competition, IBM, and the future of the computer industry. They were published by government commissions, private institutions, and corporations.

Series VIII. Legal Papers -- Private Litigation with IBM as Defendant, 1971-1984, 2.25 linear feet. This series contains legal papers generated in lawsuits brought against IBM by other computer companies and is arranged alphabetically by name of plaintiff. The records for the cases are as follows: 1. Advanced Memory Systems, Inc., ITEL Memory Equipment Corporation, Itel Computer Leasing Corporation v. IBM (1971-1972); 2. Amdahl International Corporation v. IBM (1978, 1984); 3. California Computer Products, Inc. (CalComp) v. IBM (1976); 4. Control Data Corporation (CDC) v. IBM (1971); 5. Greyhound Computer Corporation v. IBM (1971); 6. ILC Peripherals Leasing Corporation v. IBM and Memorex Corporation, MRX Sales and Service Corporation v. IBM (1976-1979); 7. Telex Corporation and Telex Computer Products, Inc. v. IBM (1973-1975); and 8. Transamerica Computer Company, Inc. v. IBM (1979). The types of legal papers include: Narrative Statements, Briefs, Exhibits, Depositions, Affidavits, Replay Memoranda, Offers of Proof, Appeals, Proposed Findings of Fact, Motions, and Preliminary Injunctions.

Series IX. Miscellaneous, 1968, 1982, and n.d., 0.25 linear feet. The final series consists of the following: a chapter on “Computers” regarding Japan's computer production and usage, n.d.; a handwritten draft “Development and Present State of the Industry in Japan” regarding Japan's computer production and usage (n.d.); “Listing of Manufacturers of Plug Compatible Products Adopted by the Court (F38),” (n.d.); and “Memorandum Concerning IBM's Market Power,” (May 1968). The series also contains “Statements made before the Subcommittee on Monopolies and Commercial Law of the House Committee on the Judiciary” (February 1982) by Lewis Bernstein (former chief of the Special Litigation Section, Antitrust Division, U.S. Department of Justice); Nicholas deB. Katzenbach (senior vice president and general counsel, IBM) and Thomas D. Barr (attorney with Cravath, Swaine & Moore); and John H. Shenefield (former chairman, National Commission to Review Antitrust Laws and Procedures and former assistant attorney general for Antitrust Division).

Accession 1980 reflects the work of DeLamarter. There are more plaintiff than defendant exhibits because of his work as an economist for the plaintiff. Overall, the collection's strength is in the amount of plaintiff exhibits, the computer industry reports, and the Department of Justice records. The Department of Justice records give insight into the way the economists for the Antitrust Division planned their attack on IBM's defense.

The IBM Antitrust Suit Records are an important primary source for research. Accession 1980 offers an opportunity to examine in detail not only the suit brought against IBM by the Department of Justice, but also the history of the computer industry and IBM, and the evolution of antitrust law.

Copyright restrictions may apply.

Gift of Richard DeLamarter

May 1991

Processed by Lynn Ann Catanese

The Computer and Communications Industry Association also gave a collection of I.B.M. antitrust suit records to the Charles Babbage Institute at the University of Minnesota. Hagley also has another collection of I.B.M. antitrust suit records in Accession 1912.