Supreme Court to Consider the Interface Between the Antitrust Laws and the Telecommunications Act of 1996

On March 10, 2003, The United States Supreme Court granted certiorari in Verizon Communications v. Law Offices of Curtis Trinko, to decide whether the customer of a local telephone company's competitor should be allowed to proceed with an antitrust claim against the local telephone service provider. The antitrust claim, dismissed in the District Court, was held valid by the Second Circuit Court of Appeals despite the pervasive regulatory regime created by the Telecommunications Act of 1996.

Background

The Telecommunications Act of 1996 ("the 1996 Act") sought to encourage competition in local telephone competition by requiring incumbent local exchange companies ("ILECs"), such as Verizon, to share their facilities at extremely attractive prices with new entrants into local telephone service, called competitive local exchange carriers ("CLECs"). CLECs claimed that Verizon filled its own customers' orders before those of the CLECs, failed at other times to fill CLEC orders at all, and failed to inform CLECs of the status of CLEC customer orders. In March 2000, Verizon paid a $3 million fine to end an FCC investigation into these allegations. Verizon also agreed to pay $10 million to CLECs injured by Verizon's conduct.

Trinko then filed a class action suit claiming that Trinko and other members of a class, defined as customers of CLECs, had been injured by Verizon's conduct and, among other things, sought damages under Section 2 of the Sherman Act for Verizon's alleged monopolization of local telephone service.

The District Court Opinion

The District Court held Trinko had standing to assert an antitrust claim. Verizon claimed the plaintiff was merely an "indirect purchaser" of Verizon services and therefore could not maintain the suit under the Sherman Act. See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). The District Court, however, held Trinko to be a CLEC customer directly injured by Verizon's treatment of CLECs. However, the District Court dismissed the antitrust claim, holding that, although the 1996 Act required Verizon to assist CLECs, the antitrust laws do not require any company, even a monopolist, to cooperate with its competitors. The plaintiff did not allege any facts to show a willful acquisition or maintenance of monopoly power, so the antitrust claim failed. The District Court did not believe that a violation of the 1996 Act, without more, could support an antitrust claim. It never reached the question of whether the...