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Court rules for AT&T in dispute with Internet firm

February 26, 2009|Bloomberg News

The U.S. Supreme Court has made it tougher to sue companies for antitrust violations, ruling Wednesday in favor of an AT&T Inc. subsidiary accused of illegally thwarting competing sellers of high-speed Internet access.

The justices unanimously rejected a claim that AT&T's Pacific Bell Telephone unit engaged in a "price squeeze" aimed at driving out competition in the market for digital subscriber line, or DSL, service. The ruling, which reversed a lower-court decision, extends a line of rulings limiting antitrust suits.

The case stemmed from the federal requirement that AT&T and other dominant local phone carriers make their lines available on a wholesale basis to rivals looking to compete at the retail level. The issue was whether the larger companies could be sued for setting their wholesale rates so high -- and their DSL retail rates so low -- that rivals couldn't compete for DSL customers.

"If both the wholesale price and the retail price are independently lawful, there is no basis for imposing antitrust liability simply because a vertically integrated firm's wholesale price happens to be greater than or equal to its retail price," Chief Justice John G. Roberts Jr. wrote for the court.

The high court over the last two decades has repeatedly ruled in favor of defendants in antitrust cases, including several rulings involving the telecommunications industry. Wednesday's decision reinforced some of those earlier pronouncements, saying companies should be afforded "clear rules" so they can avoid potential antitrust liability.

The San Francisco-based 9th U.S. Circuit Court of Appeals had said the price squeeze claim could proceed.

In rejecting the lower court's reasoning, Roberts invoked a 2004 Supreme Court decision that shielded AT&T, Verizon Communications Inc. and Qwest Communications International Inc. from some lawsuits by would-be telephone-service competitors.

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