A. Introduction
Congress designed the Telecommunications Act of 1996 (the 1996
Act) 1 to foster competition in the local telephone service market and
transform the regulated monopoly telecommunications industry into a
regulated competitive market.2 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.3 “Foremost among these duties is the [ILEC‘s] obligation
under 47 U.S.C. § 251(c) to share its network with competitors.”4
Simultaneously, Congress made it clear that the 1996 Act is intended
to coexist with existing antitrust law. The 1996 Act explicitly repealed
Section 221 (a) of the Communications Act of 1934 (the
Communications Act), 5 which had conferred antitrust immunity with
respect to mergers or consolidations approved by the Federal
Communications Commission (FCC). The 1996 Act also explicitly
included an antitrust savings clause, providing 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.”6
Consequently, the 1996 Act’s regulated competition scheme is not
intended to provide general antitrust immunity to the telecommunications
The U.S. Supreme Court has directly addressed the interplay
between the 1996 Act’s regulatory scheme and traditional antitrust
concepts. In two important cases the Court held that, notwithstanding the
defendants alleged failure to comply with obligations imposed by the
1. Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified at 47 U.S.C. §§151 et
seq.) [hereinafter 1996 Act].
2. AT&T v. Iowa Utils. Bd., 525 U.S. 366, 372-73 (1999).
3. Id. at 371.
4. Id. (citation omitted).
5. 1996 Act § 601(b)(2).
6. Id. § 601(b)(1).
348 Telecom Antitrust Handbook
1996 Act and the FCC, the plaintiffs failed to state a claim under the
Sherman Act.
In Veriz on Communications v. Law Offices of Curtis V. Trinko,7 the
Supreme Court resolved a split among the circuit courts as to whether an
ILECs failure to provide competitors access to its network could
constitute an antitrust violation. The Court cited the antitrust savings
clause of the 1996 Act8 and held that it barred a finding of implied
immunity. The Court observed 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.”9 The Court held that
the access obligations imposed by the 1996 Act did not alter traditional
antitrust principles so as to force a dominant firm to enter into a new
commercial relationship with a competitor. To the contrary, the Court
recognized that the robust regulatory structure, designed to increase
competition and prevent competitive harm, made application of the
antitrust laws less appropriate. “The 1996 Act’s extensive provisio n for
access makes it unnecessary to impose a judicial doctrine of forced
access.” 10 This statutory framework, which included obligations
enforceable by the FCC, “significantly diminishes the likelihood of
major antitrust harm.”11 The Court also recognized that the FCC was
better suited than trial courts to consider highly technical allegations of
access violations and to supervise ongoing compliance with any relief
The holding in Trinko was limited to antitrust claims based on
violations of the access obligations under Section 251 of the 1996 Act. In
Pacific Bell Telephone Co. v. linkLine Communications,13 the Supreme
Court extended Trinko to bar price squeeze claims under Section 2 of the
Sherman Act when the defendant carrier has no antitrust duty to deal
with the plaintiff. As a condition to a merger, defendant AT&T had been
required by the FCC to provide wholesale DSL transport services to
independent firms “at a price no greater than the retail price of AT&Ts
DSL service.”14 The plaintiffs were four independent Internet service
7. 540 U.S. 398 (2004) .
8. 1996 Act § 152.
9. Trinko, 540 U.S. at 407.
10. Id. at 411.
11. Id. (quoting Town of Concord v. Boston Edison Co., 915 F.2d 17, 25 (1st
Cir. 1990)) (internal quotation marks omitted).
12. Id. at 414-15.
13. 555 U.S. 438 (2009) .
14. Id. at 443.
Immunities 349
providers who competed with AT&T in the retail DSL market in
California. They contended that AT&T had monopolized the DSL
market through a pricing strategy of setting too high a price for
“wholesale” DSL transport services to the plaintiffs, and too low a price
for “retail” sales of DSL services to the consumers for whose business
the plaintiffs wer e competing with AT&T. The plaintiffs did not,
however, contend that AT&T’s retail prices were predatory under the
standard established in Brooke Group v. Brown & Williamson Tobacco
Without explicitly addressing any question of immunity, the Court
distinguished between a duty to deal imposed by regulation, on the one
hand, and an “antitrust duty to deal,” which arises in only a few specific
situations, on the other. Because AT&T could have—without running
afoul of antitrust lawsrefused entirely to deal with its competitors at
the wholesale level, and because the retail prices charged by AT&T were
not alleged to have been predatory, the Court concluded there could be
no violation.16
Though courts have not found any broadly applicable blanket
antitrust immunity for telecom-related conduct, the pervasive regulatory
scheme and complex relationships between market players and regulators
are often factors taken into account when the defendants claim to be
protected under one of the other antitrust immunity doctrines discussed
B. The State Action Doctrine
Courts have recognized that Congress did not intend the Sherman
Act to apply to anticompetitive actions of a sovereign state or its political
subdivisions acting pursuant to state policy. This concept is embodied in
the “state action” doctrine articulated by the Supreme Court in Parker v.
Brown.17 In Parker, the plaintiff sought to enjoin the California state
director of agriculture from enforcing the states Agricultural Prorate
Act, which provided that private producers could be ordered to hold
produce off the market in order to raise prices.18 Relying on principles of
federalism and state sovereignty, the Court held that the state statute was
not preempted by the Sherman Act.19 The Court emphasized that the
15. 509 U.S. 209 (1993).
16. linkLine, 555 U.S. at 454-55.
17. 317 U.S. 341 (1943).
18. Id. at 344-45.
19. Id. at 350-52.

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