Law Antitrust - Instructor: Dwight Drake Verizon v. Law Office of Curtis Tinker (2004) Basic Facts: Tinker, New York lawyer and AT&T customer, sued Verizon for Sherman 2 violation, alleging he was damaged from poor AT&T telephone service that was caused by Verizon’s failure, as the incumbent local provider, to provide AT&T, a competitor, quality long-distance access support as required by the Telecommunications Act of For such violations, Verizon had paid fines of $3 mill to US Treasury and $10 mill to competitive long distance carriers under FCC consent decree. What was Tinker’s theory under Sherman 2? Was this an essential facilities case? A refusal to deal case? Dist. Ct. dismissed antitrust claim. On what theory did Appeals Ct. reverse? What was issue for Supreme Court?

Law Antitrust - Instructor: Dwight Drake Verizon v. Law Office of Curtis Tinker (2004) Issue: Did Tinker state an recognizable claim under Sherman 2? Holding: No. -’96 Act did not create implied antitrust immunity, nor create new antitrust claims. -Sherman Act generally does not restrict independent judgment of private business to choose with whom it will deal. -Limited exception where party gives up short-term profits to create anticompetitive effect. Aspen Skiing outer limit. -Here, no existing service or refusal to deal. Just allegation of bad service. -Bad service claim not valid antitrust claim. -No need to add another exception to no duty to aid competitor proposition. ’96 Act did this. Too burdensome for court to construe violation of ’96 Act as Sherman 2 violation. -Sherman Act “Magna Carte of free enterprise, but doesn’t give court power to force monopolist to change just to yield more competition.

Law Antitrust - Instructor: Dwight Drake Verizon v. Law Office of Curtis Tinker (2004) Majority – Continued -Essential facilities doctrine of lower cts never recognized by Sup. Ct; not recognized or repudiated here. Not apply here because access was not denied. ’96 Act forced access. Concurring (Stevens, Souter, Thomas) -Sole issues should be standing, and Tinker has no standing. - Not “person” under Clayton 4 because his claim to distant, completely derivative of injury to AT&T/

Law Antitrust - Instructor: Dwight Drake Utah Pie Co. v. Continental Baking Co (1967) Basic Facts: Utah pie dominated Utah frozen pie market until three competitors came to market and sold at prices below what they sold in other markets. Utah pie market share dropped to 45%. Utah Pie sued under Section 2, alleging predatory price discrimination. Did competitors sell below cost? Did competitors have an intention to hurt Utah Pie? Was this a scheme to cause immediate destruction of Utah Pie? Was this competition good for customers? Is it not the goal of antitrust?

Law Antitrust - Instructor: Dwight Drake Utah Pie Co. v. Continental Baking Co (1967) Holding: Sufficient evidence to uphold jury verdict of predatory price discrimination. -Predatory intent clearly shown. -Need not shown immediate destruction potential of price discrimination. -Sherman reaches price discrimination that “erodes competition” as much as that that is immediately destructive. -Jury could find “effect” of discrimination may be less competition. -Statutory test is “one that necessarily looks forward on the basis of proven conduct in the past.”

Law Antitrust - Instructor: Dwight Drake Transamerica Computer v IBM Corp. (9 th Cir. 1983) Basic Facts: IBM introduced repacked peripheral computer products that were priced much lower than earlier products, but that were above average cost and were profitable. The products hurt independent peripheral providers, who brought a Section 2 claim for predatory pricing. District court dismissed case on theory that prices above average cost are per se legal. What was issue before appellate court? What test did Plaintiff want? What is difference between average cost, average variable cost and marginal cost?

Law Antitrust - Instructor: Dwight Drake Transamerican Computer v IBM Corp. (9 th Cir. 1983) Holding: No Section 2 violation, but Dist. Ct. theory wrong. -Dist. Ct. per se rule of legality when price exceeds average cost too broad. -Better rule is that were price exceeds average cost, P must proof by “clear and convincing evidence – highly probably true” that pricing was predatory. -Shouldn’t automatically apply price-cost rules to determine if monopolist’s low pricing is socially undesirable and predatory. -Inglis Ct. had switched burden of proof if price above average variable cost (burden on P) but if below (burden shift to D). Based on Areeda-Turner argument that price above average variable cost or average marginal cost not illegal. Concurring (Lucas): Should stay with per se if price above average cost. Otherwise, could inhibit low pricing and promote meritless lawsuits.