A refusal to deal may be one of the mechanisms by which a monopolist maintains its power. In determining whether a monopolist which has refused to deal with a competitor has acted lawfully or in violation of the Sherman Act, the court applies a two-part test. First, the court looks at the effects of the monopolist's conduct. Second, the court looks at its motivation.
Plaintiff is a telephone service provider in select areas in northwest Kansas. State regulations require Plaintiff to publish and distribute an annual telephone directory. Aside from its white pages listings, Plaintiff’s directory contain yellow pages advertising. Defendant Feist Publications is a Kansas corporation that distributes a competing telephone directory in northwest Kansas, including areas outside of Plaintiff’s service area. In its attempt to come up with an area-wide directory, Defendant approached all the telephone companies in Northwest Kansas, including Plaintiff, offering a fee to copy their directories. Plaintiff declined the offer but Defendant nonetheless copied the listings. Plaintiff sued for copyright violation while Defendant counterclaimed with a Sherman Act violation. The District Court of Kansas found that Plaintiff possessed monopoly power in the yellow pages advertising market and its decision not to license its white pages listings to Defendant was an act designed to maintain its monopoly position. The court awarded treble damages and attorneys fees in favor of Defendant while enjoining Plaintiff from refusing to license its white pages listings to Defendant.
Does a monopolists' refusal to deal with a competitor constitute an antitrust violation?
The holding that plaintiff's refusal to deal with a competitor was an antitrust violation was reversed because defendant had failed to establish that any harm, damages, or reduction of competition resulted from plaintiff's actions. The court did not reach these issues because it found that defendant failed to prove the refusal to deal was anti-competitive in effect. To determine whether plaintiff's refusal to deal was an attempt to maintain monopoly power, the court looked at the effects of the alleged monopolist's conduct. It concluded that defendant had failed to establish the occurrence of harm, damages, or a reduction in competition as a result of the refusal to deal. Noting that the antitrust laws were enacted to protect competition, not competitors, the court stated that the antitrust claim was not valid and reversed the holding.