High court dismisses antitrust suit
The U.S. Supreme Court put new limits on antitrust lawsuits Monday, throwing out a case that accused Verizon Communications Inc. and other local telephone companies of agreeing not to compete in one another’s home territories.
The justices, voting 7 to 2, said the lawyers pressing the case had no evidence of collusion when they filed their complaint against Verizon, AT&T; Inc. and Qwest Communications International Inc. A federal appeals court had let the case go forward.
“There is no reason to infer that the companies had agreed among themselves to do what was only natural anyway,” Justice David H. Souter wrote for the court.
The ruling might shield companies in other industries. DuPont Co., MasterCard International Inc., Visa USA Inc., Northwest Airlines Corp., UAL Corp., Louisiana-Pacific Corp. and several industry trade groups signed briefs urging tighter restrictions on antitrust suits.
The high court majority faulted the lawsuit for making only a general allegation about an illegal agreement not to compete.
The court said the companies might have made independent decisions not to venture into territory where another business has a dominant presence.
Justices Ruth Bader Ginsburg and John Paul Stevens dissented. Stevens wrote that dismissing the claim without evaluating the evidence “marks a fundamental -- and unjustified -- change in the character of pretrial practice.”
“Today’s decision affirms the freedom to decide when and how to enter new markets,” Verizon Senior Vice President John Thorne said in a statement.
He added that the high court in recent years had established that “firms will not be challenged under antitrust for making independent choices that benefit consumers.”
The case was one of four antitrust cases the high court is considering in its 2006-to-2007 term, which will conclude around the end of June. In February, the court shielded companies from claims that they illegally tried to drive a competitor out of business, overturning a $78.8-million award against Weyerhaeuser Co.
The dispute before the court stemmed from a 1996 federal law that sought to encourage regional phone companies -- those once known as “Baby Bells” -- to vie for one another’s customers.
That aspect of the law had limited success, as the largest companies proved reluctant to challenge their competitors directly.
The lawsuit contended that the likely explanation was an illegal agreement. The suit, pressed as a class action by lawyers at Milberg Weiss Bershad & Schulman in New York, also said the phone companies worked together to keep smaller rivals from making inroads.
The U.S. 2nd Circuit Court of Appeals in New York said the suit could proceed to the so-called discovery stage. That would have forced the companies to answer questions about their business practices and turn over documents.
In reversing that ruling, the Supreme Court majority said, “An allegation of parallel conduct and a bare assertion of conspiracy will not suffice.”
The lawyers pressing the suit said the lower court approach was a fair one because consumers rarely have evidence of an illegal agreement before filing suit.
