Antitrust and Local Competition Under the Telecommunications Act

Abstract

The Telecommunications Act of 1996 aimed to introduce competition into historically monopolized local markets. As frustration with instances of incumbent telephone companies' impeding new competition mounted, new entrants and consumers turned to antitrust remedies, seeking both injunctive orders and damages under theories such as essential facilities and refusal to deal. The U.S. Courts of Appeals are divided as to whether antitrust remedies are available in such cases. Some find that the specific local competition provisions of the 1996 Act occupy the field; others hold that a specific antitrust savings clause in the 1996 Act requires that antitrust be available notwithstanding regulation. A case currently pending before the Supreme Court (Law Offices of Curtis V. Trinko, LLP v. Bell Atlantic Corp.) presents the issue, although the case may be resolved on antitrust standing grounds without addressing whether the 1996 Act preempts antitrust remedies. This article concludes that antitrust remedies should not be recognized where the specific practice that forms the basis of the complaint is one within the scope of the interconnection agreements required by the 1996 Act and the implementing FCC regulations. Antitrust courts have long been reluctant to entertain essential facilities (and other) cases where the remedy effectively would require them to set prices between incumbents and new entrants. And regulatory law, through the venerable filed rate doctrine, has long recognized that the setting of such prices is a quintessentially regulatory task. The article concludes that the 1996 Act itself, through its elaborate regulatory scheme for interconnection and unbundling agreements, commits this task to regulatory agencies. Recognizing that antitrust has long promoted competition in telecommunications, the article notes that antitrust is not completely preempted in local markets. Rather, it yields only in the narrow realm of matters required to be contained in interconnection and unbundling agreements. Moreover, when the FCC acts to forbear from regulation, antitrust fully occupies the field. A comment on the article by Professor Steven Semeraro was published in the same issue of the journal and is available on SSRN as well.