Chapter 7. Immunities
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CHAPTER VII
IMMUNITIES
A. Introduction
Congress designed the Telecommunications Act of 1996 to foster
immediate competition in the local telephone service market and
transform the regulated monopoly telecommunications industry into a
regulated competitive market.1 To accomplish this goal, the 1996 Act
imposes on incumbent local exchange carriers (ILECs) “a host of duties
intended to facilitate market entry” and accelerate the development of
competition.2 “Foremost among these duties is the [ILEC’s] obligation
under [47 U.S.C. § 251(c)] to share its network with competitors.”3
Simultaneously, Congress made clear that the 1996 Act is intended
to coexist with existing antitrust law. The 1996 Act explicitly repeals
section 221(a) of the Communications Act of 1934,4 which had conferred
antitrust immunity with respect to mergers or consolidations approved by
the FCC. In addition, section 152 Note (b)(1) of the 1996 Act states that
“nothing in this Act or the amendments made by this Act shall be
construed to modify, impair, or supersede the applicability of any of the
antitrust laws.”5 Consequently, the 1996 Act’s regulated competition
scheme is not intended to provide general antitrust immunity to the
telecommunications industry. The antitrust immunity analysis in the
telecommunications industry therefore continues to be shaped by judicial
application of general antitrust immunity principles.
Nonetheless, it is not easy to apply general antitrust principles in the
current telecommunications environment. An emerging and notable line
of cases involving the interplay between the 1996 Act’s imposition of
affirmative duties on ILECs to deal with competitors and the Sherman
Act’s more general prohibition on affirmative acts intended to destroy
competition demonstrates this. In Goldwasser v. Ameritech
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
(1996), codified at 47 U.S.C. § 151 et seq. [hereinafter 1996 Act].
2. Id. at 371.
3. Id.
4. 47 U.S.C. § 152 Note (b)(2).
5. 47 U.S.C. § 152 Note (b)(1).
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Corporation,6 the Seventh Circuit affirmed the dismissal of a complaint
seeking an antitrust remedy for alleged violations of the 1996 Act.7
Although the court did not expressly create any new antitrust immunity
doctrine, the effective impact of its decision was to preclude application
of the Sherman Act to conduct governed by the 1996 Act.
After Goldwasser, a spilt among the circuit courts developed. For
example, the Fourth Circuit followed Goldwasser and found that an
ILEC’s failure to fulfill its duties set forth in the 1996 Act do not
constitute antitrust violations.8 The Second Circuit and the Eleventh
Circuit held that failure to provide reasonable access to essential
facilities, even though access to those facilities is governed by the 1996
Act, can constitute an antitrust violation.9 In Verizon Communications
6. 222 F.3d 390 (7th Cir. 2000).
7. Id. at 392.
While recognizing that “Cavalier’s complaint, contending that Verizon,
as a monopolist, deliberately attempted to exclude Cavalier from the
relevant market, does conclusorily allege all of the required elements of a
monopolization claim under § 2 of the Sherman Act,” the court looked to
the specific “breaches of duties on which those allegations depend” to
determine whether “the complaint’s allegations advance a legal theory on
which antitrust relief can be granted.” Id. at 183. Concluding that “[a]ll
of the[ ] alleged failures are failures in the performance of duties set forth
in the interconnection agreement, and, as that agreement provides,
Verizon would not have entered into such an agreement except as
required by the Telecommunications Act,” the court held that such
failures do not comprise antitrust violations. Id. at 184. The 1996 Act
was enacted “to impose entirely new duties, which were in addition to the
duties imposed by § 2 of the Sherman Act,” and thus a violation of those
duties did not also violate the Sherman Act. Id. at 188.
108 (2d Cir. 2002); Covad Communications Co. v. BellSouth Corp., 299
(11th Cir. 2002). In Trinko, the Second Circuit reached a very different
result from Goldwasser while agreeing with the Goldwasser decision’s
basic premise that “a plaintiff would not state an antitrust claim against a
defendant simply by alleging that the defendant violated its duties under
section 251” of the 1934 Act, as amended by the 1996 Act. 305 F.3d at
108. However, the court held that allegations that the defendant failed to
provide its competitor reasonable access to essential facilities on
reasonable terms were sufficient to state an antitrust claim, although the
specific factual allegations supporting this conclusion described only
violations of an interconnection agreement between the defendant and a
Immunities 355
Inc. v. Law Offices of Curtis V. Trinko, LLP,10 the Supreme Court, in an
opinion that does not cite Goldwasser, resolved the uncertainty among
the circuit courts and followed and expanded on the Seventh Circuit's
analysis.11
B. Verizon v. Trinko
In an opinion by Justice Scalia, the Supreme Court reversed the
Second Circuit and dismissed a complaint alleging violations of antitrust
laws in connection with an ILEC’s failure to provide reasonable access
to essential facilities on reasonable terms for failure to state a claim
under the Sherman Act. Justice Scalia began by reviewing the antitrust-
specific saving clause of the 1996 Act,12 and observing that “just as the
1996 Act preserves claims that satisfy existing antitrust standards, it does
not create new claims that go beyond existing antitrust standards . . .”.13
The Court found little antitrust precedent supporting the proposition that
a dominant firm like Verizon was required to cooperate with a rival,
especially where the rival was demanding that the firm enter into a new
and conceivably permanent commercial relationship. The access
obligations imposed by the 1996 Act did not change these traditional
principles. To the contrary, “[t]he 1996 Act’s extensive provision for
access makes it unnecessary to impose a judicial doctrine of forced
access.”14
In determining whether to apply traditional antitrust principles, the
Court observed,
[O]ne factor of particular importance is the existence of a regulatory
structure designed to deter and remedy anticompetitive harm. Where
such a structure exists, the additional benefit to competition provided
competitor. Id. at 102, 108. The Eleventh Circuit followed the Second
Circuit’s lead in Covad. There, the court held that allegations that an
ILEC “sometimes denied [a competitor] access to its facilities outright
and other times denied access on reasonable terms” stated a claim for
relief under the antitrust laws, notwithstanding the existence of an
interconnection agreement between the parties dictating the terms of their
interconnection under the 1996 Act. 299 F.3d at 1283, 1286-87.
10. 540 U.S. 398 (2004).
11. Id. at 414-15.
12. 47 U.S.C. § 152 (1996).
13. Trinko, 540 U.S. at 407.
14. Id. at 411.
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