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Verizon Communs., Inc. v. Law Offices of Curtis V. Trinko, LLP - 540 U.S. 398, 124 S. Ct. 872 (2004)

Rule:

Monopolization requires, in addition to the possession of monopoly power in the relevant market, the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. The mere possession of monopoly power, and the charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct. 

Facts:

The Telecommunications Act of 1996 imposes upon an incumbent local exchange carrier (LEC) the obligation to share its telephone network with competitors, 47 U.S.C. § 251(c) [47 USCS § 251(c)], including the duty to provide access to individual network elements on an "unbundled" basis, see § 251(c)(3). New entrants, so-called competitive LECs, combine and resell these unbundled network elements (UNEs). Petitioner Verizon Communications Inc. (“Verizon”), the incumbent LEC in New York State, has signed interconnection agreements with rivals such as AT&T, as § 252 obliges it to do, detailing the terms on which it will make its network elements available. Part of Verizon's § 251(c)(3) UNE obligation is the provision of access to operations support systems (OSS), without which a rival cannot fill its customers' orders. Verizon's interconnection agreement, approved by the New York Public Service Commission (PSC), and its authorization to provide long-distance service, approved by the Federal Communications Commission (FCC), each specified the mechanics by which its OSS obligation would be met. When competitive LECs complained that Verizon was violating that obligation, the PSC and FCC opened parallel investigations, which led to the imposition of financial penalties, remediation measures, and additional reporting requirements on Verizon. Law Offices of Curtis V. Trinko, LLP (“Trinko”), a local telephone service customer of AT&T, then filed this class action alleging, inter alia, that Verizon had filled rivals' orders on a discriminatory basis as part of an anticompetitive scheme to discourage customers from becoming or remaining customers of competitive LECs in violation of § 2 of the Sherman Act, 15 USC § 2 [15 USCS § 2]. The District Court dismissed the complaint, concluding that respondent's allegations of deficient assistance to rivals failed to satisfy § 2's requirements. The Second Circuit reinstated the antitrust claim.

Issue:

Did the appellate court err in reinstating the complaint?

Answer:

Yes

Conclusion:

The Court held that the complaint alleging breach of the incumbent LEC's duty under the Telecommunications Act of 1996 to share its network with competitors failed to state a claim under § 2 of the Sherman Act. The incumbent LEC's alleged insufficient assistance in the provision of service to rivals was not a recognized antitrust claim under existing refusal-to-deal precedents. Traditional antitrust principles did not justify adding the present case to the few existing exceptions from the proposition that there is no duty to aid competitors.

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