Document: 129 S. Ct. 1109 (2009) PACIFIC BELL TELEPHONE CO., dba AT & T CALIFORNIA, et al. v. LINKLINE COMMUNICATIONS, INC., No. 07-512. Supreme Court of United States. Argued December 8, 2008. Decided February 25, 2009. *1114 Ed Kolto, Gleam O. Davis, Los Angeles, CA, Patrick J. Pascarella, San Antonio, Texas, Michael K. Kellogg, Aaron M. Panner, Huber, Hansen, Todd, Evans Figel, P.L.L.C., Washington, D.C., for Petitioners. Maxwell Blecher, Gary Joye, Blecher Collins, P.C., Respondents. Chief Justice ROBERTS delivered the opinion Court. The plaintiffs in this case, respondents here, allege that a competitor subjected them to "price squeeze" violation § 2 Sherman Act. They assert such claim can arise when vertically integrated firm sells inputs at wholesale and also finished goods or services retail. If has power market, it simultaneously raise price cut retail good. This will have effect "squeezing" profit margins any competitors market. Those firms pay more they need; same time, their prices match other firm's prices. question before us is whether *1115 price-squeeze may be brought under Act defendant no antitrust obligation sell plaintiff first place. We hold brought. I case involves market digital subscriber line (DSL) service, which method connecting Internet high speeds over telephone lines. T[1] owns much infrastructure facilities needed provide DSL service California. In particular, controls most what known as "last mile" lines connect homes businesses network. Competing providers must generally obtain access T's order serve customers. Until recently, Federal Communications Commission (FCC) required incumbent phone companies transmission independent providers, theory would spur competition. See re Appropriate Framework Broadband Access Wireline Facilities, 20 FCC Rcd. 14853, 14868 (2005). 2005, largely abandoned forced-sharing requirement light emergence competitive beyond high-speed service; now faces robust competition from cable wireless satellite services. Id., 14879-14887. As condition recent merger, however, remains bound by mandatory interconnection requirements, obligated "DSL transport" greater than service. Inc. BellSouth Corp., 22 5662, 5814 (2007). are four (ISPs) compete with Plaintiffs do not own all supply customers instead lease transport pursuant merger conditions described above. thus participates both levels; provides ISPs directly consumers July 2003, suit District Court, alleging violated Act, 15 U.S.C. 2, monopolizing complaint alleges refused deal plaintiffs, denied essential facilities, engaged squeeze." App. 18-19. Specifically, contend squeezed setting low maneuver allegedly "exclude[d] unreasonably impede[d] competition," allowing "preserve maintain its monopoly control Internet." Ibid. Verizon Law Offices Curtis V. Trinko, LLP, 540 U.S. 398, 410, 124 872, 157 L. Ed. 2d 823 (2004), we held duty rivals those "sufficient" level Shortly after issued decision, moved judgment on pleadings, arguing *1116 plaintiffs' claims were foreclosed Trinko. had Pet. Cert. 77a-85a, but motion dismiss respect claims, id., 86a-90a. court acknowledged argument "has certain logic it," Trinko "simply does involve claims." 86a. noted been recognized several Circuits "are cognizable existing standards." 89a, n. 27. At Court's request, then filed an amended providing detail about claims. again dismiss, could only proceed if met two established requirements predatory pricing: below-cost pricing "`dangerous probability'" recoup lost profits. Brooke Group Ltd. Brown Williamson Tobacco 509 209, 222-224, 113 2578, 125 168 (1993). did reach issue meet because concluded complaint, "generously construed," satisfied criteria. 46a-49a, 56a. certified earlier interlocutory appeal "Trinko bars squeeze where parties compelled federal communications laws." 56a-57a. On appeal, Appeals Ninth Circuit affirmed denial pleadings 503 F.3d 876 emphasized squeezing theory." 883. Because "a formed part fabric traditional law prior Trinko," "those should remain viable notwithstanding either telecommunications statutes Trinko." Based record it, original stated potentially valid Judge Gould dissented, noting "the notion `price squeeze' itself between precedents." 886. A allegations price, so analyzed each component separately. He insulates review upstream price." 886-887. With downstream he argued side cannot considered create satisfy Group, set unmistakable limits within meaning 887 (citing supra, 2578). these contained was below cost losses later recouped. F.3d, 887. allowed amend could, good faith, meeting requirements. granted certiorari, 554 ___, 128 2957, 171 883 (2008), resolve conflict bring *1117 plaintiff. Covad Co. Bell Atlantic 398 666, 673-674 (C.A.D.C.2005) (holding claims). reverse. II assumed unusual posture. agree Gould's dissenting position pricing. ask vacate decision favor remand instructions given leave claim. words, longer pleased initial mulligan try different theory. Some amici argue moot confession error. "[w]ith petitioners aligned [the same] presented, party concrete stake case's outcome advocating contrary position." Brief COMPTEL 6. think moot. First, continue seek relief. asks reverse issue. complaint. adverse litigation whole, specific proceedings Second, clear unequivocally brief oral argument, refer "pricing claim." Respondents 13. appear acknowledge believe necessary showing made least partial reliance sort accepted Appeals. one point, example, suggest price" pertinent going forward dissent; opinion, "in essence takes issu[e] out case." Given ambiguity, live dispute appropriate decision. Cf. Friends Earth, Laidlaw Environmental Services (TOC), Inc., 528 167, 189, 120 693, 145 610 (2000) (a party's voluntary conduct renders "`absolutely clear'" take course action). Amici writ certiorari "lack adversarial presentation" interested party. 7. To contrary, prudential concerns our answering presented. defended Appeals' stage, invested substantial amount effort, resources briefing merits case. absence merits, presumably binding precedent Circuit, persist. Two submitted briefs defending participate argument. 555 (2008). address *1118 III Section makes unlawful "monopolize, attempt monopolize, combine conspire person persons, monopolize trade commerce among States, foreign nations." 2. Simply possessing charging violate 2; rather, statute targets willful acquisition maintenance distinguished growth development consequence superior product, business acumen, historic accident." States Grinnell 384 563, 570-571, 86 1698, 16 778 (1966). general rule, free choose whom deal, well prices, terms, dealing. Colgate Co., 250 300, 307, 39 465, 63 992 (1919). But there rare instances dominant incur liability purely unilateral conduct. For ruled charge "predatory" pricesbelow-cost drive allow monopolist losses. U.S., 2578. Here, contain 10-24. There limited circumstances refusal give rise liability. Aspen Skiing Highlands 472 585, 608-611, 105 2847, 467 (1985). competitors, 84a-85a, holding challenged appeal.[2] challenge here focuses priceswhere pricingand terms dealingwhere deal. Plaintiffs' type "squeezes" competitors. requires operating markets, ("upstream") ("downstream") raising while cutting competitors' costs (because inputs) lower revenues price). Price-squeeze defendants "fair" "adequate" margin price. consider state laws wholesale. *1119 B 1. straightforward application forecloses network elements competing rates. 402-403, 872. plaintiffa customer Verizon's rivalsasserted support services, making difficult fill customers' orders. 404-405, alleged impeding ability carriers local plaintiff's actionable all, "Verizon's insufficient assistance provision rivals" wholesale, certainly find commercially advantageous. wholesale; arises regulations, 1117-1118. meaningful distinction "insufficient assistance" rejected instant quality structure. purposes, reason distinguish nonprice components transaction. See, e.g., American Telephone Telegraph Central Office Telephone, 524 214, 223, 118 1956, 141 222 (1998) ("Any excessive rates couched inadequate vice versa"). nub identicalthe (upstream monopolists) abused prevent rival effectively holds regard controlling 883; 86a; see 27-30. technically true, reasoning applies equal force profits just poor-quality favorable simply stopped run afoul Under circumstances, offer preferred. assertion defendant's "too low." *1120 Here too doctrine. "[C]utting increase often very competition." Matsushita Elec. Industrial Zenith Radio 475 574, 594, 106 1348, 89 538 (1986). cases seeking impose low, mistaken inferences "especially costly, chill designed protect." Ibid.; 226, 2578; Cargill, Monfort Colo., 479 104, 121-122, 17, 107 484, 93 427 avoid chilling aggressive competition, carefully low. prevail claim, demonstrate that: (1) complained measure rival's costs"; (2) "dangerous probability" able "investment" "Low benefit regardless how set, long above levels, threaten Richfield USA Petroleum 495 328, 340, 110 1884, 109 333 (1990). 10-24, allegation Recognizing invite precise harm sought Group: Firms might refrain potential 2578 ("As exclusionary relevant reflects structure predator, represents practical judicial tribunal without courting intolerable risks legitimate cutting"). 3. looking relation nothing amalgamation meritless level. level, manner preserves rivals' margins.[3] C Institutional counsel against recognition repeatedly importance *1121 rules law. Courts ill suited "to act central planners, identifying proper quantity, dealing." 408, "`No explain adequately reasonably supervise. problem deemed irremedia[ble] compulsory assume day-to-day characteristic regulatory agency.'" 415, 872 (quoting Areeda, Essential Facilities: An Epithet Need Limiting Principles, 58 Antitrust L.J. 841, 853 (1989)); Town Concord Boston Edison 915 F.2d 25 (C.A.1 1990) (Breyer, C.J.) ("[A]ntitrust courts normally direct administration, relying remedies ... easier administer"). It enough identify remedy anticompetitive practice markets duty-to-deal doctrine 225, (predation "requir[e] understanding extent duration predation, relative financial strength predator intended victim, respective incentives will"); require police ensure being squeezed. And aiming moving target, since interaction result squeeze. Perhaps troubling, safe harbor practices. Concord, (antitrust "must lawyers clients"). context, know cost. No guidance available 3B P. Areeda H. Hovenkamp, ¶ 767c, p. 138 (3d ed. 2008) severe recognizing [price-squeeze] offense, formulating suitable remedy"). commonly articulated standard squeezes 23-25; Alcoa, 148 416, 437-438 (C.A.2 1945). One colleagues highlighted flaws test Socratic fashion: "[H]ow judge jury determine `fair price?' Is charged suppliers primary product? None exist. `would set' monopolized? How examining demands, indeed acting like rate-setting agency, last years? Further, decide size `gap?' Must large make `living profit,' matter inefficient be?... respond demands change inevitably will?" 25. proposing "transfer test" squeeze: presumed *1122 selling purchased Institute (AAI) 30; 16-19; Ray Indiana Mich. 606 F. Supp. 757, 776-777 (N.D.Ind.1984). Whether administrable, lacks grounding jurisprudence. whatever like; forbid lawfully obtained monopolies 407, ("The mere possession power, concomitant unlawful; important element free-market system"). Similarly, forbidindeed, encouragesaggressive predatory. 223-224, independently lawful, basis imposing happens entry barriers fortify monopolist's position; impair innovation driving business. AAI 11-15; 23-24. problem, identified caused 3A Law¶ 126 (2d 2002) ("[I]t significance [of squeeze] apart consequences vertical integration itself"). violates doctrines, need endorse new harm. IV Lastly, mentioned above, asked granted. Our grant addressed complaint.[4] reasons stated, *1123 forth generously construed, read 47a-52a, That order, applied "no facts" pleading lenient. Corp. Twombly, 550 544, 561-563, 127 1955, 167 929 states upon relief matters properly it. Even further add survive dismiss. bankrupt refusing altogether, why prevents putting Nevertheless, questions instance. issues outside scope presented below. Cutter Wilkinson, 544 709, 718, 7, 2113, 161 1020 (2005) ("[W]e review, view"). * preferred rivals. 409-410, dangerous probability loses Group. nonetheless tried join succeed succeed, alchemize into form never decline invitation recognize wrong right. reversed, remanded consistent opinion. ordered. BREYER, STEVENS, SOUTER, GINSBURG join, concurring judgment. accept respondents' concession majority's wrong, Circuit's "predatory pricing" Linkline Communications, SBC California, 876, *1124 finds natural home monopolization Government seeks show rests, "skill, foresight industry," Aluminum America, 430 1945) (Alcoa), conduct, 576, pointed "`means illicit exclusion, means myriad.'" 414, Microsoft 253 34, (C.A.D.C.2001) (en banc) (per curiam)). "course dealing" that, even profitable, indicates "willingness forsake short-term achieve end." 409, 610-611, (1985); Complaint International Business Machines Civil Action 69 Civ. 200 (SDNY, Jan. 1969), 20(c), reprinted Fisher, McGowan, Greenwood, Folded, Spindled, Mutilated: Economic Analysis IBM 357 (1983). And, Hand wrote many years ago, fall latter category. 437-438. logic, particular "squeezed customer" exclusionary. court, faced rather unlikely (hypothetical) answer former. neither hypothetical nor foreshadow answer. regulated firm. During time covered common carrier, "just reasonable" "unreasonabl[y] discriminat[ory]." 47 §§ 201(b), 202(a) (2000 ed.). my view, purchaser (which, monopolist, such) win "squeezed" (to plaintiff) whose compete). When exists deter harm, enforcement likely benefits. 26-29 1990). 3 D. Turner, ¶¶ 834-836, pp. 344-355 (1978) (whether counts "exclusionary" purposes depends host factors, including, defendant, nature conduct). Unlike regulators controlled F.2d, 29. fact difference; rightly so, far tell, gone petitioners' lowered FPC Conway 426 271, 279, 96 1999, 48 626 (1976); 726e, 219-220. pricing, *1125 anything procedural history asserting not, said, so. NOTES [1] Petitioners consist corporate entities subsidiaries, names structures changed frequently litigation. simplicity, "AT T." [2] arose 878-879, 6, assumption. aside reasoning, seems quite plaintiffs. Such butas recognized, Rcd., 14879-14887the competitive; face stiff providers. [3] Like Appeals, 880, years, beginning Hand's 416 (Alcoa). Alcoa using aluminum ingot sheet fabricators. concluded: "That `sheet' high, unquestionable, provided, held, regarded higher price.'" 438. developments economic jurisprudence decisions us. [4] note irregularity case: Normally, supersedes 6 C. Wright A. Miller, Practice Procedure 1476, 556-557 ed.1990). 2005 36a-52a, 2004 orderaddressing complaintfor Both parties, Solicitor General, expressed confusion 9, (noting "some ambiguity" certified); 17 unclear Order appeal"); 8-10. majority holdings time.

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