Monday, May 21, 2007
Posted by Shubha Ghosh
Thanks to my co-blogger for being so prompt in posting on Twombly. I just finished my first read of the opinion, and the opinion seems consistent with the Court's 2004 decision in Trinko: it's darn hard, and perhaps frankly impossible, to challenge the RBOC's under the antitrust laws. Trinko forecloses Section Two challenges, for the most part, and now the proof of agreement required after Twombly for a Section One claim seems insurmountable given how the Court understands the Telecommunications industry. Danny cited the appropriate language about the legal standard. Here is a telling passage about how the Court applies that standard to telecom:
"[Twombly's complaint] was not suggestive of conspiracy, not if history teaches anything. In a traditionally regulated industry with low barriers to entry, sparse competition among large firms dominating separate geographical segments of the market could very well signify illegal agreement, but here we have an obvious alternative explanation. In the decade preceding the 1996 Act and well before that, monoply was the norm in telecommunications, not the exception."
Hence, the Court goes on, the lack of entry into a neighbor's market is consistent with the regional Bells accepting the status quo ante the 1996 Act and does not necessarily provide a basis to claim an agreement as required under Section One. In effect, the Court adopts the district court's view of the pleadings: if there is an explanation of the pleaded facts consistent with unilateral action, then the Section One claim is dismissed.
But how about this interpretation of events, from a decidedly public choice perspective: the 1996 Act itself is the agreeement to not compete on each other's territory? That theory requires a facial challenge to the statute itself under the antitrust laws and seems to be foreclosed by Trinko as well as today's decision in Twombly.
More on this later...