FTC Issues Statement Regarding Solicitor Generals Amicus Brief Filing in Pacific Bell Telephone Company v. linkLine Communications

Today the Federal Trade Commission announced that it has decided not to join an amicus brief filed by the Department of Justice urging the Supreme Court to grant certiorari in Pacific Bell Telephone Company v. linkLine Communications, No. 07-512 (U.S. Sup. Ct., Oct. 17, 2007). The Commission issued the statement in the interests of transparency. It can be found as a link to this press release on the Commission’s Web site.

The plaintiff in linkLine alleged that defendant violated Section 2 of the Sherman Act when it used its alleged monopoly power in the wholesale market for DSL service to “squeeze” its downstream competitors in the retail DSL market by charging wholesale prices equal to, and at times higher than, its retail prices. The district court and the Ninth Circuit held that “price-squeeze” allegations in this case were sufficient to make out a claim under Section 2.

In the Commission’s statement, the FTC summarizes the case and the recent ruling by the Ninth Circuit, discusses its analysis of the issues presented, and concludes “[i]n sum, we do not believe this case is ripe for review by the Supreme Court. There is no apparent justification, based on only a partial record of the plaintiffs’ pleadings in this case, for turning back 60 years of case law that embraces price-squeeze claims under Section 2 of the Sherman Act.”

In the Commission’s view, the Ninth Circuit’s narrow decision does not conflict with the Court’s antitrust jurisprudence and is consistent with Judge Hand’s decision in United States v. Aluminum Co. of America, 148 F.2d 416 (2nd Cir. 1945) and Justice (then Judge) Breyer’s decision in Town of Concord v. Boston Edison Co., 915 F.2d 17 (1st Cir. 1990). The Commission sees no reason to reject the latter jurisprudence, especially where, as here, the decision of the Ninth Circuit is consistent with those of the other courts of appeals that have addressed price-squeeze allegations, and the Court must credit the allegations of the amended complaint in any review.

The vote not to join the brief was 3-0, with Chairman William E. Kovacic recused.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.