ZWeR 2009, 343

RWS Verlag Kommunikationsforum GmbH, Köln RWS Verlag Kommunikationsforum GmbH, Köln 1611-1982 Zeitschrift für Wettbewerbsrecht ZWeR 2009 EntscheidungsbesprechungenWarren S. Grimes*

US Supreme Court Rejects Price Squeeze Claim: A High Point for Divergence Between US and European Law?

In February of 2009, the United States Supreme Court decided Pacific Bell Telephone Co. v. Linkline Communications, Inc.,1 declaring that a price-squeeze claim is not cognizable under Section 2 of the Sherman Act. The decision is the eighth antitrust decision handed down by the Court in the last three years – since John Roberts became Chief Justice in 2006. Each of these eight decisions has involved private enforcement actions and each has been favorable to the defendants. These decisions have widened the gap between European and US competition law on issues such as abuse of dominance and vertical restraints.
The Linkline decision is important for what it says about the price squeeze claims, for its broader discussion of abuse of dominance, and for its offerings concerning the relationship between regulated industries and competition law. I explore these issues below. I raise questions about the soundness of the Court's analysis. In particular, the decision to eliminate a price squeeze claim may lessen the number of successful Section 2 claims and, in so doing, sacrifice the consumer welfare goals that underlie US antitrust law. The decision may also have the unintended effect of discouraging deregulation. Linkline adds to the difficulties for a plaintiff wishing to advance a Section 2 challenge against genuinely abusive behavior by a dominant firm. Finally, Linkline widens the gap between US antitrust law and European competition law on abuse of dominance issues.
With the benefit of time, historians may see Linkline as the high point in divergence between US and European competition law. With the shift in antitrust policy under President Obama, the federal antitrust agencies are likely to take a more aggressive stance toward abuses by dominant firms. In future cases, the Antitrust Division and the Federal Trade Commission are likely to push the Supreme Court toward positions on competition law issues more consistent with European law. Absent significant change in the membership of the Court, however, an abrupt shift in the Court's line of decisions carving out great latitude for a dominant firm's aggressive conduct seems unlikely. Adjustments to US law are likely to be incremental.

Contents

  • I. Background of this Litigation
    • 1. Preexisting US Law Governing Price Squeezes
    • 2. US Competition Law Governing Regulated Industries
  • II. Linkline in the Supreme Court
    • 1. The Majority Opinion of Chief Justice John Roberts
    • 2. Justice Breyer's Concurrence
  • III. Analysis
    • 1. Duty to Deal
    • 2. Predatory Pricing
    • 3. The Price Squeeze Claim Revisited
    • 4. Divergence from European Law
  • IV. Conclusions
*
*)
Professor of Law, Southwestern Law School, Los Angeles/USA
1
1)
129 S. Ct. 1109 (2009).

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