U.S. Supreme Court sides with AT&T

Chris Rizo Feb. 25, 2009, 10:52am

U.S. Supreme Court building

WASHINGTON (Legal Newsline)- A unit of AT&T Corp. did not charge Internet service providers unreasonable rates for access to the company's network, the U.S. Supreme Court ruled Wednesday.

The ruling overturns a decision by the 9th U.S. Circuit Court of Appeals in San Francisco that allowed the lawsuit against AT&T subsidiary Pacific Bell Telephone Co. to proceed.

The ISPs claimed that the prices AT&T was charging them were too high for them to compete effectively with Pacific Bell's own Internet service. Under the Telecommunications Act of 1996, AT&T is required to sell wholesale DSL to other companies that, in turn, sell retail DSL to consumers.

Remanding the case back to a trial court, the justices said the Internet service providers, including Linkline Communications Inc., Notelog Inc. and In-Reach Internet Inc., could seek a predatory pricing claim.

"If both the wholesale price and the retail price are independently lawful, there is no basis for imposing antitrust liability simply because a vertically integrated firm's wholesale price happens to be greater than or equal to its retail price," Chief Justice John Roberts Jr. wrote for the high court's majority.

When the lawsuit was filed, the AT&T unit was part of SBC Communications Inc., which has since merged with AT&T.

The case is Pacific Bell Telephone Co. v. Linkline Communications Inc., 07-512.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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