Opinion ID: 75967
Heading Depth: 4
Heading Rank: 2

Heading: The Refusal-to-deal Doctrine

Text: The refusal-to-deal doctrine is unavailing for the same reasons that its cousin, the essential facilities doctrine, is unavailing. Because this doctrine of forced-access is used for the same purpose as the essential facilities doctrine, all of the problems discussed above apply. If one persists on using a different analytical hat for essentially the same conduct, however, none of the refusal-to-deal cases countenance the bold extension proffered by the panel. The touchstone refusal-todeal case is the much-criticized Aspen Skiing, supra. Liability was imposed in that case because the defendant terminated a mutually beneficial, pre-existing business arrangement. The case hinged on the fact that Aspen did not engage in “competition in the merits”; rather, it chose to forego “short-run benefits and consumer goodwill in exchange for a perceived long-run impact on its smaller rival.” Aspen Skiing, 474 U.S. at 610-11, 105 S. Ct. at 2861. In this case, there was no preexisting business arrangement that BellSouth once thought to be mutually beneficial. Moreover, Covad cannot possibly claim that the obligation it 17 seeks to impose with the antitrust laws – forced sharing – serves BellSouth’s interests. Its decision not to share is perfectly legitimate competition on the merits. B. The Undermining of the 1996 Act The position taken by the panel – namely, that the 1996 Act does not require obligations above and beyond those required by the antitrust laws but rather overlaps with the antitrust laws – results in a regulatory scheme that is in considerable tension with the regulatory scheme envisioned by Congress. First, the panel’s holding makes the 1996 Act’s post-agreement enforcement scheme a nullity. This is because breach-of-contract claims would become secondary to antitrust claims, and the contract claims would be adjudicated under the supplemental jurisdiction of federal district courts (rather than by state courts or PSCs). Why would a CLEC ever sue only in contract when it can jettison the regulatory scheme and sue for treble damages in federal court? After all, ILECS are all monopolists, and virtually anything they do that breaches an interconnection agreement can be the subject of an antitrust suit under the theory that the breach is done to protect the ILEC’s market position.17 On this point, I agree with the 17 The panel maintained that before a complaint can pass Rule 12(b)(6) muster, it must allege more than monopoly power and breach of contract; it must also allege that the defendant engaged in conduct “with an intent to monopolize.” I cannot think of a situation, however, in which an ILEC would be liable in breach and yet a creative plaintiff’s lawyer could not also 18 Seventh Circuit that “[t]he elaborate system of negotiated agreements and enforcement established by the 1996 Act would be brushed aside by any unsatisfied party with the simple filing of an antitrust action.” See Goldwasser, 222 F.3d 390, 400-01 (7th Cir. 2000). Second, the panel’s holding undermines Congress’s efforts to place regulatory authority in the hands of the FCC – an expert agency – rather than the courts. Prior to the panel’s decision, the FCC (and, to some extent, PSCs) had exclusive authority to implement the 1996 Act’s interconnection and unbundling requirements. If the panel is correct in its conclusion that Covad has made out an antitrust claim under the essential facilities doctrine, will federal district courts issue injunctions18 requiring ILECs to undertake obligations above and beyond those required by the 1996 Act? Even if district courts refrain from issuing forcedaccess injunctions (with their concomitant price terms) under the theory that regulatory bodies have already been established to set interconnection terms and UNE rates, courts will no doubt enjoin ILECs from engaging in future anticompetitive behavior. And since the claims of anticompetitive conduct made allege that the breach was made with an eye toward benefitting the ILEC and thus preserving the ILEC’s position in the relevant market. 18 Covad did not specifically ask for injunctive relief in is complaint, although it requested “[s]uch other relief as the Court deems just and proper.” 19 by CLECs will essentially track the many contractual obligations that ILECs must undertake pursuant to their interconnection agreements,19 the district courts will essentially oversee ILEC compliance under their contempt power. For every alleged violation of an interconnection agreement, the ILEC will have to show cause why it should not be held in contempt and sanctioned. Thus, the federal courts will be charged with closely monitoring ILEC compliance with the many requirements of the ILEC/CLEC interconnection agreements. This was not what Congress envisioned when it replaced Judge Greene with the FCC.