Supreme Court Rules For AT&T In Antitrust Case - InformationWeek

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2/26/2009
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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.

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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