Trinko v. Baxter: The Demise of U.S. v. AT&T

Timothy Brennan, Oct 20, 2005

The Supreme Court’s decision in Verizon v. Trinko, especially in relying on regulation to justify limiting the scope of antitrust enforcement, contradicts both the outcome in U.S. v. AT&T twenty years ago and the theory on which that case rested. The fundamental facts, discrimination against unaffiliated competitors in access to regulated monopoly network services, were the same in both cases. In U.S. v. AT&T, those facts were seen as consistent with a view that regulation created anticompetitive vertical incentives that would not be present in unregulated markets. In Trinko, the Court concluded that the regulation mitigated a problem that would be of greater concern in unregulated markets. Additional error arises in Trinko from its reliance on economically erroneous monopolization doctrines that immunize refusals to deal where no profits were sacrificed or where the dealing was not voluntary. The fundamental reversal of the relevance of regulation in monopolization cases implies that had Trinko been the law in 1980, the antitrust cases against AT&T would have failed and it would have remained a monopolist in both local and long distance service. Effects go beyond the telecommunications sector to other partially regulated industries and perhaps to the use of economics in antitrust jurisprudence.

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