Supreme Court Hangs Up On A Call To Use Antitrust Law To Compel Competitors To Aid Their Rivals

The United States Supreme Court's most recent antitrust pronouncement appears likely to sound far beyond the telecommunications industry out of which it arose. In Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, No. 02-682, (U.S. Jan. 13, 2004), the Court opined that the lawful use of monopoly power "is an important element of the free-market system," reaffirmed a monopolist's right not to aid its competitors, narrowly construed its most far-reaching Sherman Act 2 precedent, and called into question the future viability of two monopolization theories at times relied on by lower federal courts. See http://www.supremecourtus.gov/opinions/03pdf/02-682.pdf.

The Trinko Law Office began the case as an antitrust class action. Trinko alleged that Verizon's failure to comply with obligations imposed by the Telecommunications Act of 1996 to share its telephone network with competitors constituted unlawful monopolization. Trinko, a customer of AT&T, claimed that Verizon had disregarded those obligations so that it could overcharge its rivals and discourage customers from switching to other carriers. The district court dismissed the complaint on the grounds that the antitrust laws, unlike the Telecommunications Act, did not require Verizon to lend aid to its rivals. The Second Circuit reversed.

In reinstating the district court's dismissal, the Supreme Court began by explaining that, although the 1996 Telecommunications Act expressly "preserves claims that satisfy existing antitrust standards," it should not be read to "create new claims that go beyond . . . [those] standards." Slip Op. at 7.

Turning to its analysis of "existing antitrust standards," the Court first strongly reaffirmed the proposition that antitrust laws generally do not require companies - even monopolists - to aid their competitors: "[A]s a general matter, the Sherman Act 'does not restrict the long recognized right of [a] trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.' United States v. Colgate & Co., 250 U. S. 300, 307 (1919)." Id. at 8. The Court explained that attempts to use the antitrust laws to impose duties to aid competitors undermines the competitive forces those laws protect and thrusts judges into regulatory roles for which they are ill-suited:

exercise his own independent discretion as to parties with whom he will deal.' United States v. Colgate &...