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MCI Commc'ns Corp. v. Am. Tel. & Tel. Co. - 708 F.2d 1081 (7th Cir. 1983)


Application of the general principles to a particular claim of implied immunity requires an evaluation of the specific regulatory scheme involved and the administrative authority exercised pursuant to that scheme. The inquiry must focus upon (1) whether the activities that are the subject of plaintiff's complaint were required or approved by the Federal Communications Commission, pursuant to its statutory authority, in a way that is incompatible with antitrust enforcement, or (2) whether these activities are so pervasively regulated "that Congress must be assumed to have forsworn the paradigm of competition. 


Plaintiffs MCI Communications Corporation and MCI Telecommunications Corporation (MCI) sued defendant American Telephone and Telegraph Company (AT&T) under § 2 of the Sherman Antitrust Act, claiming in part that AT&T engaged in predatory pricing of both its long distance communications services. At trial, MCI alleged that AT&T had engaged in predatory pricing of both its Telpak and Hi-Lo services for long distance business communications. The jury found that Telpak was lawfully priced, but that Hi-Lo was priced below its fully distributed costs and was predatory. MCI was awarded $ 1.8 billion in treble damages under § 4 of the Clayton Act, 15 U.S.C.S. § 15. AT&T appealed, contending that the lower court's decision incorrectly focused on blanket immunity rather than immunity for the actions of MCI complained. AT&T also contended that the district court should have dismissed this suit on its motion because the FCC's regulatory control over AT&T's conduct rendered AT&T immune from antitrust liability


Did the lower court err in its decision to rule in favor of MCI Communications Corporation and MCI Telecommunications Corporation?


Yes, in some aspects.


The United States Court of Appeals concluded that, with respect to interconnections, the Federal Communications Commission's regulatory authority under the Federal Communications Act, 47 U.S.C.S. § 151 et seq., did not preclude application of the Sherman Act. The mere pervasiveness of a regulatory scheme does not immunize an industry from antitrust liability for conduct that is voluntarily initiated. Defendant AT&T was not entitled to antitrust immunity for the competitive rate filings which formed the basis of plaintiff's claims. According to the Court, the jury's award of damages was improper because of erroneous instructions to the jury, the use of an improper cost standard, and insufficiency of the evidence. The choice of a cost-based standard for evaluating predatory pricing claims was a question of law to be decided by the judge. The judgment was reversed only as to the award of damages and disapproved findings. In all other respects it was affirmed, and the cause was remanded for a new trial on the issue of damages only.

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