As it becomes ever more clear that regulation under the Telecommunications Act of 1996 (1996 Act) has not fostered the vigorous competitive climate that many expected, competitors and consumers have increasingly pinned their hopes on antitrust litigation to challenge the position of the incumbent telephone monopolists. These antitrust challenges have produced a number of significant decisions assessing the relationship between the antitrust laws and the 1996 Act and outlining the antitrust rules applicable to the telecommunications business. A split has developed among the appellate courts that have considered these issues.
Against this backdrop, the US Court of Appeals for the Ninth Circuit has decided MetroNet Services Corp. v. US West Communications. (1) This ruling adds to the growing list of decisions validating charges of antitrust violations by Regional Bell Operating Companies (RBOCs) in dealing with competitors. In MetroNet, a three-judge panel of the Ninth Circuit rejected a challenge by Qwest (the name adopted by the defendant after the filing of the case) to MetroNet's evidence and held that the case should proceed to trial.
The MetroNet Court joins several other US Circuit Courts in holding that the 1996 Act does not immunize incumbent telephone companies from antitrust actions and in finding such an action meritorious as a matter of antitrust law. The decision is significant because it allows the case to proceed based on examination of the plaintiff's evidence under a relatively rigorous standard of proof, while many previous decisions in this area have examined only the bare allegations of the plaintiff's complaint under a much more forgiving legal standard. Most significantly, the MetroNet decision comes at a crucial time, since the Supreme Court has before it a case that could result in a key ruling on the antitrust liability of incumbent telephone monopolists.
DECISIONS BEFORE METRONET
A number of trial and appellate courts have considered the antitrust liability of RBOCs, with varying results. By the time of the MetroNet decision, however, three appellate decisions had crystallized the issues. The first of these is Goldwasser v. Ameritech Corp., a consumer class action in which a panel of the Seventh Circuit affirmed the dismissal of a complaint that charged Ameritech with monopolization under [section] 2 of the Sherman Act, among other things.
The court first analyzed complaint allegations that it viewed as claims that Ameritech's behavior was illegal simply because it violated the 1996 Act. The 1996 Act requires incumbent telephone monopolists like Ameritech to give competitors access to their networks by interconnection, resale, and access to unbundled network elements. (2) Some portions of the Goldwasser complaint were phrased in terms specific to these 1996 Act obligations and characterized Ameritech's conduct as violating the Act's requirements. The court found that these allegations did not state a valid antitrust claim, and observed that the "affirmative duties to help one's competitors" that the 1996 Act imposes "do not exist under the unadorned antitrust laws," so that merely alleging a breach of 1996 Act duties was not enough to establish monopolization. (3)