[governance] U.S. Supreme Court Rules For AT&T In Antitrust Case

[Yehuda Katz]

Supreme Court Rules For AT&T In Antitrust Case 

The lawsuit claimed AT&T was anti-competitive because it was charging high
wholesale prices to ISPs while offering low-cost DSL to consumers. 

By Marin Perez,  InformationWeek 
Feb. 26, 2009 
Art Ref.: 
http://www.informationweek.com/story/showArticle.jhtml?articleID=214700018 
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The U.S. Supreme Court ruled in favor of an AT&T subsidiary in an antitrust
lawsuit that accused the telecommunications company of trying to drive out
competitors in the DSL market. 

In a unanimous decision, the justices rejected the lawsuit of Internet service
providers led by Linkline Communications that claimed AT&T's Pacific Bell
Telephone was being monopolistic by engaging in "price squeezing." The ISPs
purchase high-speed Internet service from AT&T and resell it to customers, but
the complaint said AT&T was offering retail DSL services to consumers at a low
price to undercut its rivals. 

An antitrust lawsuit was first filed in California courts in 2003, under the
claim that AT&T's pricing allowed it to preserve and maintain a monopoly over
the DSL market. The court ruled in favor of the plaintiffs, as did the 9th
Circuit of Appeals in 2007. 

But the nation's top court disagreed, saying the plaintiffs were trying to
bring a new form of antitrust liability. The Supreme Court drew from a 2004
ruling, Verizon v. Trinko, which stated that companies with no antitrust duties
to their rivals were under no obligation to provide service to them. 

"If AT&T had simply stopped providing DSL transport service to the plaintiffs,
it would not have run afoul of the Sherman Act," said Chief Justice John
Roberts. "Under these circumstances, AT&T was not required to offer this
service at the wholesale prices the plaintiffs would have preferred." 

The ruling will probably not put the issue to rest, as the other service
providers will likely file another antitrust lawsuit in a lower court using
different rationale. 

"If AT&T can bankrupt the plaintiffs by refusing to deal altogether, the
plaintiffs must demonstrate why the law prevents AT&T from putting them out of
business by pricing them out of the market," Roberts said.
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