VERIZON COMMUNICATIONS INC. v. LAW OFFICES OF CURTIS V. TRINKO, LLP

Syllabus VERIZON COMMUNICATIONS INC. v. LAW OFFICES OF CURTIS V. TRINKO, LLP

No. two six eight two. Argued October fourteen, two thousand three-Decided January thirteen, two thousand four

The Telecommunications Act of nineteen ninety-six imposes upon an incumbent local exchange carrier the obligation to share its telephone network with competitors, forty-seven United States Code section two hundred fifty-one (c), including the duty to provide access to individual network elements on an "unbundled" basis, see section two hundred fifty-one (c)(three). New entrants, so-called competitive local exchange carriers, combine and resell these unbundled network elements. Petitioner Verizon Communications Inc., the incumbent local exchange carrier in New York State, has signed interconnection agreements with rivals such as AT&T, as section two hundred fifty-two obliges it to do, detailing the terms on which it will make its network elements available. Part of Verizon's section two hundred fifty-one (c)(three) network element obligation is the provision of access to operations support systems, without which a rival cannot fill its customers' orders. Verizon's interconnection agreement, approved by the New York Public Service Commission, and its authorization to provide long-distance service, approved by the Federal Communications Commission, each specified the mechanics by which its operations support systems obligation would be met. When competitive local exchange carriers complained that Verizon was violating that obligation, the New York Public Service Commission and Federal Communications Commission opened parallel investigations, which led to the imposition of financial penalties, remediation measures, and additional reporting requirements on Verizon. Respondent, 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 local exchange carriers in violation of section two of the Sherman Act, fifteen United States Code section two. The District Court dismissed the complaint, concluding that respondent's allegations of deficient assistance to rivals failed to satisfy section two's requirements. The Second Circuit reinstated the antitrust claim.

Held: Respondent's complaint alleging breach of an incumbent local exchange carrier's nineteen ninety-six Act duty to share its network with competitors does not state a claim under section two of the Sherman Act. Pages four hundred five through four hundred sixteen.

(a) The nineteen ninety-six Act has no effect upon the application of traditional antitrust principles. Its saving clause-which provides that "nothing in this Act ... shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws," forty-seven United States Code section one hundred fifty-two, note-preserves

Syllabus claims that satisfy established antitrust standards, but does not create new claims that go beyond those standards. Pages four hundred five through four hundred seven.

(b) The activity of which respondent complains does not violate preexisting antitrust standards. The leading case imposing section two liability for refusal to deal with competitors is Aspen Skiing Company versus Aspen Highlands Skiing Corporation, four hundred seventy-two United States five hundred eighty-five, in which the Court concluded that the defendant's termination of a voluntary agreement with the plaintiff suggested a willingness to forsake short-term profits to achieve an anticompetitive end. Aspen is at or near the outer boundary of section two liability, and the present case does not fit within the limited exception it recognized. Because the complaint does not allege that Verizon ever engaged in a voluntary course of dealing with its rivals, its prior conduct sheds no light upon whether its lapses from the legally compelled dealing were anticompetitive. Moreover, the Aspen defendant turned down its competitor's proposal to sell at its own retail price, suggesting a calculation that its future monopoly retail price would be higher, whereas Verizon's reluctance to interconnect at the cost-based rate of compensation available under section two hundred fifty-one (c)(three) is uninformative. More fundamentally, the Aspen defendant refused to provide its competitor with a product it already sold at retail, whereas here the unbundled elements offered pursuant to section two hundred fifty-one (c)(three) are not available to the public, but are provided to rivals under compulsion and at considerable expense. The Court's conclusion would not change even if it considered to be established law the "essential facilities" doctrine crafted by some lower courts. The indispensable requirement for invoking that doctrine is the unavailability of access to the "essential facilities"; where access exists, as it does here by virtue of the nineteen ninety-six Act, the doctrine serves no purpose. Pages four hundred seven through four hundred eleven.

(c) Traditional antitrust principles do not justify adding the present case to the few existing exceptions from the proposition that there is no duty to aid competitors. Antitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue. When there exists a regulatory structure designed to deter and remedy anticompetitive harm, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny. Here Verizon was subject to oversight by the Federal Communications Commission and the New York Public Service Commission, both of which agencies responded to the operations support systems failure raised in respondent's complaint by imposing fines and other burdens on Verizon. Against the slight benefits of antitrust intervention here must be weighed a realistic assessment of its costs. Allegations of violations of section two hundred fifty-one (c)(three) duties are both technical and extremely numerous, and hence difficult for antitrust courts to evaluate. Applying section two's requirements to this regime can readily result in "false positive" mistaken inferences that chill the very