Davis Polk Antitrust Update
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The Supreme Court unanimously held in Pacific Bell Telephone Co. v. Linkline Communications, Inc. (decided February 25, 2009) that price squeeze claims are not cognizable absent a duty-to-deal under the antitrust laws. The plaintiffs were internet service providers, which leased DSL facilities from AT&T at wholesale and used them to provide retail DSL service to customers. As a condition for a recent merger, the Federal Communications Commission (“FCC”) required AT&T to provide wholesale DSL transport service to independent firms at a rate no greater than the retail price of AT&T’s own DSL service. AT&T controls most of the “last mile” – the lines that connect individual homes and businesses to a telephone network. In order to provide competing DSL service to residential and business customers, independent firms, such as the plaintiffs, must lease AT&T’s last mile facilities.

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