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David Olsky, Jan 14, 2008
In linkLine Communications, Inc. v. SBC California, Inc., the U.S. Court of Appeals for the Ninth Circuit ruled that an antitrust plaintiff may bring a “price squeeze” claim even when the alleged monopolist had no legal duty to deal with its competitors. In doing so, the court provided no standards as to how the factfinder would determine whether the monopolist had charged a “fair” price to the plaintiff in the upstream market (or to its own customers in the downstream market). The only restriction placed by the Ninth Circuit on bringing this claim was that the plaintiff demonstrate that the defendant had a “specific intent” and set prices to “serve its monopolistic purposes.” Setting aside the issue of whether a price squeeze claim is ever permissible when a monopolist has no duty to deal with its competitors, the Ninth Circuit’s failure in linkLine to provide any objective standards as to how the factfinder shall determine a “fair price” creates great uncertainty about the potential for antitrust liability whenever a monopolist lowers its price to retail customers – uncertainty that may discourage firms with market power from enacting pro-competitive price cuts.
