Court declines expanding reach of antitrust laws to cover DSL and telephone services

The U.S. District Court for the Southern District of New York has granted defendant Verizon’s motion to dismiss in the case of Greco v. Verizon Commumications, Inc., holding that the effect of the antitrust laws should not be expanded to prohibit Verizon from refusing to provide DSL service to customers of competing local telephone providers.

Upset that Verizon offered its DSL service only to customers who also purchased its local phone service, Plaintiff Greco filed a class action antitrust lawsuit. Greco claimed, among other things, that this conduct of Verizon violated §2 of the Sherman Act by monopolizing local phone service. Verizon moved to dismiss, and the court granted the motion.

At issue was whether the court should extend the reach of the antitrust laws to force a “telecommunications monopolist” such as Verizon to deal with certain customers. The analysis relied heavily on a previous case involving Verizon, the 2004 Supreme Court decision of Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, (540 U.S. 398, 406 (2004) (“Trinko” ).

The Trinko case had dealt with the question of whether Verizon had violated §2 of the Sherman Act where it had allegedly discouraged customers from dealing with its rivals through various means. In that case, the court declined to apply §2, “because of the uncertain virtue of forced sharing and the difficulty of identifying and remedying anticompetitive conduct by a single firm.” The Trinko court considered four factors, which the court also considered in the present case: (1) the costs versus benefits of antitrust intervention; for example, whether judicial intervention would risk distorting investment, (2) whether the requested relief would require a court to assume a role for which it is “ill-suited,” i.e., to thrust it into the role of a “central planner,” (3) whether remediation would require “continuing supervision of a highly detailed decree,” and (4) whether there exists a “regulatory structure designed to deter and remedy anticompetitive harm.”

In declining to expand the reach of the antitrust laws in the present case, the court focused on how daunting it would be to figure the amount of damages to which the plaintiff would be entitled. For example, the court would have to consider such details as what amounts had been spent on running wires to a customer’s home (including securing rights of way, digging trenches or placing poles, and running wire underground or along poles), and how such costs should bee allocated among unbundled services. The court noted that such allocation of costs is a highly complex and hotly contested issue, and that it was thus ill-suited to redress the alleged injuries.

Greco v. Verizon Comm., Inc. (2005 WL 659200 (S.D.N.Y., March 22, 2005)