On January 13, 2004, the U.S. Supreme Court issued its much-anticipated decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP (Trinko). The Trinko decision addresses three of the most controversial areas arising under Section 2 of the Sherman Act: a dominant firm’s refusal to deal with its rivals; the “essential facilities” doctrine; and “monopoly leveraging.” Trinko, a New York City law firm, was a local telephone service customer of AT&T. In its complaint, Trinko alleged that Verizon had provided interconnection access to its local exchange network on a discriminatory basis as part of an anticompetitive scheme to prevent AT&T and other competitors from encroaching on its historical local exchange monopoly. The district court dismissed the complaint in its entirety, but the U.S. Court of Appeals for the Second Circuit reinstated certain counts, including the antitrust claims. In Trinko, the Supreme Court reversed the Second Circuit, holding that the plaintiff’s refusal to deal and “monopoly leveraging” claims failed to state a cause of action under Section 2.
Writing for the majority, Justice Scalia emphasized that the antitrust laws impose no generalized duty upon firms--even firms which enjoy a monopoly position--to deal with their rivals. Noting that Trinko placed great reliance on its 1985 decision in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., the leading case imposing Section 2 liability based on a refusal to cooperate with a rival, the Court observed that “Aspen Skiing is at or near the outer boundary of § 2 liability.” The Court then went on to conclude that the refusal to deal alleged by Trinko “does not fit within the limited [duty to deal] exception recognized in Aspen Skiing” since there was no allegation that Verizon had voluntarily engaged in a prior course of dealings with its rivals, or that it had refused to provide any product that it already sold at the retail level to any other customers.
The Court also concluded that the “essential facilities” doctrine had no application in Trinko since the Telecommunications Act of 1996 required Verizon to provide interconnection services to other carriers on a nondiscriminatory basis, precluding any claim that access to the services at issue was unavailable. Perhaps more telling, however, was the Court’s seemingly hostile attitude towards the “essential facilities” doctrine itself. Observing that the doctrine had been “crafted by some lower courts,” the Court emphasized that it has never been recognized by the Supreme Court, and the Court found “no need to either recognize it or to repudiate it here.” Moreover, the Court went out of its way to distinguish its prior decisions in Railroad Terminals and Associated Press--standard citations for the origin of the “essential facilities” doctrine--as involving concerted action, as opposed to a unilateral refusal to deal.
Finally, perhaps the most significant aspect of the Trinko decision (albeit relegated to a footnote) was the Court’s treatment of the plaintiff’s “monopoly leveraging” claim. In footnote 4, the Court held that the Second Circuit had erred “[t]o the extent that the Court of Appeals dispensed with a requirement that there be a ‘dangerous probability of success’ in monopolizing a second market” in the context of a “monopoly leverage” claim. In so doing, the Court effectively overruled the Second Circuit’s 1979 decision in Berkey Photo, wherein the appeals court had held that leveraging violates Section 2 even when there is no threat of monopolizing a second market and resolved a long-standing split in the circuits on the issue.
Although Trinko arose in the unique context of an incumbent local exchange carrier’s duties under the Telecommunications Act of 1996, it has much broader implications under the law of monopolization generally. The Court gave Aspen Skiing a very narrow reading, effectively limiting it to its facts; seemingly exhibited considerable hostility to the “essential facilities” doctrine; and substantially restricted the “monopoly leveraging” doctrine. In sum, Trinko substantially narrows the circumstances under which a dominant firm can be compelled to give aid and comfort to its allegedly disadvantaged rivals.