Court Rules in Favor of Telecom Firms

A Verizon payphone is seen in Philadelphia, in this April 30, 2007 file photo. The Supreme Court on Monday, May 21, 2007 sided with the nation's largest local phone companies in a lawsuit by consumers alleging anticompetitive business practices. The court ruled 7-2 that the suit lacked any specifics in accusing the companies of secretly agreeing not to compete in each other's territories for local telephone and high-speed Internet service. (AP Photo/Matt Rourke, file) (Matt Rourke - AP)

The defendants were Bell Atlantic Corp., BellSouth Corp., Qwest Communications International Inc., and SBC Communications Inc. Bell Atlantic is now Verizon Communications Inc. and SBC bought AT&T Inc. and the renamed company, AT&T, merged with BellSouth.

Consumers represented by a prominent firm of plaintiffs' attorneys sued when the companies kept to their own territories rather than competing.

A natural explanation is that "the former government-sanctioned monopolists were sitting tight, expecting their neighbors to do the same thing," Souter wrote.

The consumers also alleged the local phone companies conspired to keep smaller companies from competing successfully in the larger companies' markets.

Nothing in the complaint suggests that the companies' resistance to the upstart competitors was anything more than natural reaction by each acting alone, wrote Souter.

In their arguments, the companies said it is understandable each company would decide individually against devoting scarce resources to the risky enterprise of entering new markets.

The court's decision "should discourage plaintiffs from filing antitrust conspiracy claims based upon nothing more than evidence of parallel conduct and a hope that more will turn up in discovery," said attorney Edward Schwartz.

The Bush administration supported the phone companies, saying the lawsuit "fails to provide concrete notice of the alleged wrongdoing." Those filing such lawsuits, said the Justice Department's solicitor general, need to be able to point to allegations of particular jointly attended meetings or to involvement of alleged conspirators in joint activities.

The case is Bell Atlantic v. Twombly, 05-1126.