
Since the 1910s, American antitrust regulators had been accusing the Bell System of abusing its monopoly power and in 1974 the Antitrust Division of the U.S. Department of Justice brought a lawsuit against Bell claiming violations of the Sherman Act. Feeling that it was about to lose the suit, AT&T proposed an alternative: its breakup. Effective January 1, 1984 AT&T completes the divestiture of its local operating companies, forming a new AT&T and the so-called Baby Bells.
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