Mandating access to telecom and the internet: The hidden side of Trinko

Columbia Law Review

Volumn 107, Issue 8, 2007, Pages 1822-1907

  Spulber, Daniel F ^a,b   Yoo, Christopher S ^c  

^a NORTHWESTERN UNIVERSITY   (United States)

^b NORTHWESTERN UNIVERSITY SCHOOL OF LAW   (United States)

^c UNIVERSITY OF PENNSYLVANIA   (United States)

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EID: 38149057536     PISSN: 00101958     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (526)

1. See S. Pac. Commc'ns Co. v. AT&T Co., 740 F.2d 980, 999 (D.C. Cir. 1984) (affirming lower court decision finding no antitrust liability); MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1174 (7th Cir. 1983) (affirming lower court decision finding antitrust liability while remanding for new trial on damages).
2. United States v. AT&T Co. (Modification of Final Judgment), 552 F. Supp. 131 (D.D.C. 1982), aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983). This suit was the third case brought by the federal government against AT&T, See United States v. W. Elec. Co., 1956 Trade Cas. (CCH) ¶ 68,246 (D.N.J. Jan. 24, 1956); United States v. AT&T Co., No. 6082 (D. Or. Mar. 26, 1914) (decree), reprinted in Decrees and Judgments in Federal Anti-Trust Cases, July 2, 1890-January 1, 1918, at 483 (Roger Shale ed., 1918).
3. See S. Pac., 740 F.2d at 1007-09; MCI, 708 F.2d at 1132-33, 1147-48; Modification of Final Judgment, 552 F. Supp. at 1352-53, 1360-61; see also Lawrence A. Sullivan & Warren S. Grimes, The Law of Antitrust: An Integrated Handbook § 14.7(a)(1), at 817 (2d ed. 2006) (arguing that government suit against AT&T settled in 1956 was based on essential facilities doctrine).
4. See, e.g., 3A Philip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶¶ 770-774, at 164-227, ¶ 787(c)(1), at 301-10 (2d ed. 2002) (criticizing essential facilities doctrine as incompatible with underlying purposes of antitrust law and difficult to administer);
5. Herbert Hovenkamp, Federal Antitrust Policy § 7.7, at 309 (3d ed. 2005) (calling essential facilities doctrine "one of the most troublesome, incoherent and unmanageable of bases for Sherman § 2 liability" and arguing that "[t]he antitrust world would almost certainly be a better place if it were jettisoned");
6. Philip Areeda, Essential Facilities: An Epithet in Need of Limiting Principles, 58 Antitrust L.J. 841, 841 (1990) (calling essential facilities doctrine "less a doctrine than an epithet" that needs limiting principles to bring it back into line with antitrust policy);
7. Keith N. Hylton, Economic Rents and Essential Facilities, 1991 BYU L. Rev. 1243, 1245 (finding that in many cases essential facilities doctrine does not promote competition and arguing for presumption against claims that application of doctrine will enhance consumer welfare);
8. Abbott B. Lipsky, Jr. & J. Gregory Sidak, Essential Facilities, 51 Stan. L. Rev. 1187, 1195 (1999) ("[M]andatory access remedies, such as the essential facilities doctrine, do not fit comfortably within antitrust law.");
9. David McGowan, Regulating Competition in the Information Age: Computer Software as an Essential Facility Under the Sherman Act, 18 Hastings Comm. & Ent. L.J. 771, 781-806 (1996) (arguing that essential facilities doctrine "embodies some of the most unfortunate tendencies of antitrust" and proposing limiting doctrine to natural monopolies);
10. David Reiffen & Andrew N. Kleit, Terminal Railroad Revisited: Foreclosure of an Essential Facility or Simple Horizontal Monopoly?, 33 J.L. & Econ. 419, 421-25 (1990) (claiming that economics of vertical exclusion render essential facilities doctrine superfluous and ineffective);
11. Gregory J. Werden, The Law and Economics of the Essential Facility Doctrine, 32 St. Louis U. L.J. 433, 480 (1987) (arguing that Supreme Court was "wise" not to recognize essential facilities doctrine and that lower courts should reject it);
12. David J. Gerber, Note, Rethinking the Monopolist's Duty to Deal: A Legal and Economic Critique of the Doctrine of "Essential Facilities," 74 Va. L. Rev. 1069, 1071, 1113 (1988) (arguing for narrow essential facilities doctrine).
13. More sympathetic assessments of the essential facilities doctrine also exist. See, e.g., Robert Pitofsky et al., The Essential Facilities Doctrine Under U.S. Antitrust Law, 70 Antitrust L.J. 443, 444 (2002) (noting importance of essential facilities doctrine to control of monopolies arising out of intellectual property);
14. James R. Ratner, Should There Be an Essential Facility Doctrine?, 21 U.C. Davis L. Rev. 327, 367-68 (1988) (supporting reformulated essential facilities doctrine);
15. John T. Soma et al., The Essential Facilities Doctrine in the Deregulated Telecommunications Industry, 13 Berkeley Tech. L.J. 565, 580-613 (1998) (arguing that essential facilities doctrine represents viable alternative to existing government regulation).
16. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 388 (1999) (declining to address whether 47 U.S.C. § 251 (2000) incorporated essential facilities doctrine); id. at 428 (Breyer, J., concurring in part and dissenting in part) (noting that Court has "never adopted" essential facilities doctrine); Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 611 n.44 (1985) (finding it "unnecessary to consider the possible relevance of the 'essential facilities' doctrine").
17. 540 U.S. 398 (2004).
18. Id. at 411.
19. See infra notes 254-256 and accompanying text.
20. See infra notes 257-265 and accompanying text.
21. See Trinko, 540 U.S. at 410, 414.
22. 15 U.S.C. § 2 (2000).
23. See, e.g., Standard Oil Co. v. United States, 221 U.S. 1, 61-62 (1911) (noting that statute "omi[tted] . . . any direct prohibition against monopoly in the concrete," while "reach[ing] every act bringing about the prohibited results"); United States v. Aluminum Co. of Am. (Alcoa), 148 F.2d 416, 429 (2d Cir. 1945) (noting that prior courts had emphasized "the use of the active verb, 'monopolize,'" when concluding that section 2 did not penalize those who "unwittingly find ulemselves in possession of a monopoly . . . without having intended . . . to put an end to existing competition").
24. Alcoa, 148 F.2d at 430; accord United States v. United Shoe Mach. Corp., 110 F. Supp. 295, 342 (D. Mass. 1953) (noting that section 2 does not criminalize monopolies obtained through "superior skill, superior products, natural advantages, . . . economic or technological efficiency, . . . low margins of profit maintained permanently and without discrimination, or licenses conferred by, and used within, the limits of law, (including patents on one's own inventions, or franchises granted directly to the enterprise by a public authority)"), aff'd mem., 347 U.S. 521 (1954). This reading of section 2 also draws support from the scant legislative history that exists. In the words of Senator George Frisbie Hoar: I suppose, therefore, . . . a man who merely by superior skill and intelligence . . . got the whole business because nobody could do it as well as he could was not a monopolist, but that it involved something like the use of means which made it impossible for other persons to engage in fair competition, like the engrossing, the buying up of all other persons engaged in the same business. 21 Cong. Rec. 3152 (1890).
25. See Nat'l Comm'n for the Review of Antitrust Laws and Procedures, Report to the President and the Attorney General viii, 141-42, 151-59 (1979) (proposing antitrust liability for persistent monopoly power even in absence of culpable conduct);
26. Phil C. Neal et al., Report of the White House Task Force on Antitrust Policy (1968), reprinted in Antitrust L. & Econ. Rev., Winter 1968-69, at 11, 24-33 (arguing for subjecting concentrated industries to antitrust liability even absent evidence of predatory or abusive conduct);
27. 3 Philip Areeda & Donald F. Turner, Antitrust Law ¶ 623(a), at 63-64 (1st ed. 1978) (arguing in favor of antitrust condemnation of substantial and persistent market power even in absence of anticompetitive conduct); Ratner, supra note 4, at 368-70 (arguing for using essential facilities doctrine to redress inefficient output reduction and supracompetitive pricing even absent steps to maintain or obtain market power);
28. Oliver E. Williamson, Dominant Firms and the Monopoly Problem: Market Failure Considerations, 85 Harv. L. Rev. 1512, 1522-25 (1972) (arguing in favor of antitrust liability for firms that achieve dominance through innocent conduct). These proposals draw support for their position from language in United States v. Griffith, 334 U.S. 100, 107 (1948) ("[M]onopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains unexercised."), and Alcoa, 148 F.2d at 428 (suggesting that monopolist violates antitrust statutes simply by existing and conducting business).
29. See Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 547-49 (9th Cir. 1991) (rejecting call to penalize firms that achieve monopoly through superior competitive performance without engaging in predatory conduct); 3 Areeda & Hovenkamp, supra note 4, ¶ 630(a), at 44-46 (rejecting condemnation of monopolies that arise without anticompetitive conduct because doing so would create disincentives to compete on merits); Hovenkamp, supra note 4, § 6.3, at 275-76 (same); Sullivan & Grimes, supra note 3, § 3.4, at 113 (same).
30. Alcoa, 148 F.2d at 430.
31. United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).
32. See, e.g., Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004) ("The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system."); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 276, 294 (2d Cir. 1979) (noting that "a large firm does not violate [section] 2 simply by reaping the competitive rewards attributable to its efficient size" and that no violation has occurred "unless the monopoly has bolstered its power by wrongful actions").
33. See Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 600 (1985) (noting that "even a firm with monopoly power has no general duty to engage in a joint marketing program with a competitor" and approving of jury instruction stating that "a firm possessing monopoly power has no duty to cooperate with its business rivals"); United States v. Colgate & Co., 250 U.S. 300, 307 (1919) ("In the absence of any purpose to create or maintain a monopoly, the [Sherman Act] does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.").
34. Aspen Skiing, 472 U.S. at 601.
35. See Hecht v. Pro-Football, Inc., 570 F.2d 982, 992 (D.C. Cir. 1977).
36. See, e.g., A.D. Neale, The Antitrust Laws of the United States of America 68-72, 131-37 (1st ed. 1960) (synthesizing early cases in attempt to develop coherent doctrine surrounding monopolistic refusals to deal);
37. Lawrence Anthony Sullivan, Handbook of the Law of Antitrust § 48, at 125-32 (1977) ("A firm which holds a lawful monopoly by virtue of ownership of a unique resource is guilty of monopolization if it exploits that resource in ways which exclude or disadvantage customers arbitrarily or invidiously.").
38. For an overview of the early history of the essential facilities doctrine, see Daniel E. Troy, Note, Unclogging the Bottleneck: A New Essential Facility Doctrine, 83 Colum. L. Rev. 441, 447-52 (1983).
39. See, e.g., Hecht, 570 F.2d at 992 ("'[W]here facilities cannot practicably be duplicated by would-be competitors, those in possession of them must allow them to be shared on fair terms.'" (quoting A.D. Neale, The Antitrust Laws of the United States of America 67 (2d ed. 1970))).
40. See Lipsky & Sidak, supra note 4, at 1191-93 (collecting lower court cases applying essential facilities doctrine).
41. 224 U.S. 383 (1912).
42. See, e.g., Adam Candeub, Trinko and Re-Grounding the Refusal to Deal Doctrine, 66 U. Pitt. L. Rev. 821, 828, 836 (2005) (emphasizing domination of consortium of railroads by single financier and noting lack of alternatives to bridge at issue);
43. Richard A. Epstein, Monopoly Dominance or Level Playing Field? The New Antitrust Paradox, 72 U. Chi. L. Rev. 49, 66 (2005) (treating Terminal Railroad Association as single firm).
44. See Lipsky & Sidak, supra note 4, at 1189.
45. 15 U.S.C. § 1 (Supp. IV 2004).
46. For example, when Congress authorized the construction of the second bridge, it attempted to protect against merger to monopoly by prohibiting anyone from owning stock in both bridges. This was repealed in what the United States described as a "mysterious manner" before the Association obtained control of the second bridge. See Statement and Brief of the Attorney General of the United States at 53, Terminal R.R., 224 U.S. 383 (No. 386); see also Reiffen & Kleit, supra note 4, at 426-27 (describing acquisition of second bridge by Association). The Association acquired the ferry companies only after a rival railroad, the Rock Island, attempted to purchase one of the ferries as part of a plan to begin providing service in St Louis. The bidding war between the Association and the rival railroad ended when the Association acquired the ferry while simultaneously agreeing to admit the Rock Island and seven other railroads to the consortium. See id. at 427-29.
47. See Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 410 n.3 (2004); see also 3A Areeda & Hovenkamp, supra note 4, ¶ 772(b)(1), at 176-78, ¶ 772(d), at 192-95 (describing Terminal Railroad Court's emphasis on combination of companies operating bridge and attempting to exclude rivals); Hovenkamp, supra note 4, § 7.7, at 309 (pointing out that because Terminal Railroad "involve [ed] an agreement among multiple firms who controlled the facility," it "makes a poor ancestor for the essential facilities doctrine"); Ratner, supra note 4, at 336-37 (arguing that Terminal Railroad is more appropriately classified as "a classic group boycott" or "horizontal agreements in restraint of trade in violation of section 1").
48. 410 U.S. 366, 368-72 (1973).
49. Id.
50. Id. at 375-78. Interestingly, the Court did so even though Congress had explicidy refused to give the Federal Power Commission the authority to require companies like Otter Tail to wheel power. Id. at 374.
51. United States v. Otter Tail Power Co., 331 F. Supp. 54, 61 (D. Minn. 1971) (invoking "bottleneck" theory), modified, 410 U.S. 366 (1973).
52. See 3A Areeda & Hovenkamp, supra note 4, ¶ 787(c) (1), at 303 (noting that Otter Tail court did not "adequately elaborate[]" upon underlying grounds for decision); Thomas E. Kauper, Section Two of the Sherman Act: The Search for Standards, 93 Geo. L.J. 1623, 1627 (2005) ("Virtually no discernible principle can be found in OtterTail . . . .").
53. 3A Areeda & Hovenkamp, supra note 4, ¶ 787(c)(1), at 306.
54. Id. ¶ 772(b)(3), at 181.
55. Id.
56. Id. ¶ 787(c) (1), at 305; accord id. ¶ 774(e), at 225 (describing tendency of courts imposing access remedies to "submit the matter to a regulatory agency" in cases involving regulated industries).
57. 472 U.S. 585, 587 (1985).
58. Id. at 587-94.
59. Id. at 605-11.
60. Id. at 598 n.23.
61. Id. at 599, 611 n.44.
62. Id. at 587, 594, 596 n.20 (1985).
63. See 2A Areeda & Hovenkamp, supra note 4, ¶ 533(g), at 207-09 (describing inability of party with control over one local ski area to exert market power and charge monopoly prices for destination skiing); Hovenkamp, supra note 4, § 3.2(c), at 90 (arguing that trial judge should have explicitiy instructed jury "to consider whether downhill skiing in Aspen was a relevant market"); Thomas J. Campbell, The Antitrust Record of the First Reagan Administration, 64 Tex. L. Rev. 353, 360 (1985) (claiming that market definition adopted in Aspen Skiing "is open to question because Aspen competes with many other ski resorts both in Colorado and in other states");
64. Frank H. Easterbrook, On Identifying Exclusionary Conduct, 61 Notre Dame L. Rev. 972, 973 n.2 (1986) (arguing that Ski Co. failed to make use of one of "its strongest points" by "not challeng[ing] the definition of the market"); Lipsky & Sidak, supra note 4, at 1209 ("[P]roducer substitutability should have made the relevant market not Aspen, Colorado but rather a larger universe of ski resorts in the United States, Canada, and perhaps even Europe.");
65. John Shepard Wiley Jr., "After Chicago": An Exaggerated Demise?, 1986 Duke L.J. 1003, 1007 (noting that Ski Co.'s conduct is best understood as "attempt to improve its position in the national skiing market" by eliminating free riding, which requires national geographic market).
66. See Easterbrook, supra note 46, at 975-76 ("[Ski Co.] might have said that Highlands was an inefficient 'fringe' firm taking a free ride on the fact that Skiing had developed the resort's principal mountains and attracted tourists . . . .").
67. See Wiley, supra note 46, at 1005-06 (noting negative impact of Highlands's conduct upon Ski Co.'s ability to compete with other resorts in national market).
68. Aspen Skiing, 472 U.S. at 595.
69. See 3A Areeda & Hovenkamp, supra note 4, ¶ 774(e), at 227 (noting reluctance of courts "to interfere when the claim is that the defendant is actually dealing, but only on disadvantageous or onerous terms").
70. See supra notes 41, 43 and accompanying text.
71. Pitofsky et al., supra note 4, at 443; accord Byars v. Bluff City News Co., 609 F.2d 843, 846 (6th Cir. 1980) (calling doctrine "one of the most unsettled and vexatious in the antitrust field").
72. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771(a), at 169-71 (discussing relationship between essential facilities doctrine and vertical exclusion); Werden, supra note 4, at 462 ("The essential facility doctrine . . . involve[s] vertical integration.").
73. See generally Christopher S. Yoo, Vertical Integration and Media Regulation in the New Economy, 19 Yale J. on Reg. 171, 187-205 (2002) [hereinafter Yoo, Vertical Integration] (reviewing critiques of vertical exclusion).
74. See, e.g., Carl Kaysen & Donald F. Turner, Antitrust Policy: An Economic and Legal Analysis 132 (1959) (arguing that vertical mergers "can, through the leverage effects of firms in one market on those in another to which they stand in the relation of supplier or customer, enhance existing power, or enable it to be applied in a new market").
75. See 3A Areeda & Hovenkamp, supra note 4, ¶ 773(c), at 205-06 (noting that firm must be "actual or potential monopolist of a realistically defined market" with high entry barriers in order to harm competition in vertically related market).
76. See, e.g., Aaron Director & Edward H. Levi, Law and the Future: Trade Regulation, 51 Nw. U. L. Rev. 281, 290 (1956) ("Firms that are competitive cannot impose coercive restrictions on their suppliers or their customers as a means of obtaining a monopoly. They lack the power to do this effectively.").
77. See, e.g., Roger D. Blair & David L. Kaserman, Antitrust Economics 416-17 (1985) (noting requirement of barriers to entry in secondary market);
78. Sam Peltzman, Issues in Vertical Integration Policy, in Public Policy Toward Mergers 167, 174 (J. Fred Weston & Sam Peltzman eds., 1969) (noting requirement of concentration in secondary market).
79. Brown Shoe Co. v. United States, 370 U.S. 294 (1962).
80. See Oliver Hart & Jean Tirole, Vertical Integration and Market Foreclosure, 1990 Brookings Papers on Econ. Activity: Microeconomics 205, 207 (using successive duopoly model);
81. Janusz A. Ordover et al., Equilibrium Vertical Foreclosure, 80 Am. Econ. Rev. 127, 129 (1990) (same);
82. Michael H. Riordan, Anticompetitive Vertical Integration by a Dominant Firm, 88 Am. Econ. Rev. 1232, 1232 (1998) (assuming existence of dominant firm);
83. Michael H. Riordan & Steven C. Salop, Evaluating Vertical Mergers: A Post-Chicago Approach, 63 Antitrust L.J. 513, 527-46 (1995) (requiring at least oligopolistic market conditions in both primary market and vertically related market);
84. Michael A. Salinger, Vertical Mergers and Market Foreclosure, 103 Q.J. Econ. 345, 349 (1988) [hereinafter Salinger, Market Foreclosure] (assuming existence of successive oligopoly);
85. Steven C. Salop & David T. Scheffman, Raising Rivals' Costs, 73 Am. Econ. Rev. (Papers & Proc.) 267, 268 (1983) (applying dominant firm model).
86. See Riordan & Salop, supra note 60, at 538-41 (describing how competition in output markets can prevent prices from rising even if vertical exclusion raises prices in input markets); Michael A. Salinger, Vertical Mergers in Multi-Product Industries and Edgeworth's Paradox of Taxation, 39 J. Indus. Econ. 545, 550 (1991) [hereinafter Salinger, Edgeworth's Paradox] (noting absence of welfare loss when both upstream and downstream markets are perfecdy competitive).
87. See Michael D. Whinston, Tying, Foreclosure, and Exclusion, 80 Am. Econ. Rev. 837, 852-54, 856 (1990).
88. The analysis of Whinston that follows is based on Christopher S. Yoo, What Can Antitrust Contribute to the Network Neutrality Debate?, 1 Int'l J. Comm. 493, 507 (2007), available at http://www.ijoc.org/qjs/index.php/ijoc/ article/view/153/ 97 (on file with the Columbia Law Review) [hereinafter Yoo, What Can Antitrust Contribute].
89. See Whinston, supra note 62, at 850. All of the other scenarios Whinston discusses incorporate all of the structural preconditions by assuming that the tying firm holds a monopoly over the tying product. See id. at 841-52.
90. See id. at 852-54.
91. See id. at 855-56; see also Dennis W. Carlton & Michael Waldman, The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries, 33 RAND J. Econ. 194, 215-16 (2002) (extending Whinston's work and similarly concluding that possibility that exclusion could benefit consumers justifies cautioning against "trying to turn the theoretical possibility for harm shown here into a prescriptive theory of antitrust enforcement").
92. See, e.g., Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 Yale L.J. 19, 20-21 (1957) (providing seminal statement of this principle).
93. Town of Concord v. Boston Edison Co., 915 F.2d 17, 32 (1st Cir. 1990).
94. 3A Areeda & Hovenkamp, supra note 4, ¶ 771(b), at 171-72; accord id. ¶ 774(b), at 215 ("[S]imple refusal to share a monopoly is not antitrust injury . . . . [T]here may be cases where the refusal to share seems anticompetitive because there is little hope of competitive alternatives . . . . Even here, however, a mere order forcing the defendant to share does nothing to increase market output or decrease price.").
95. See id. ¶ 772(c)(4), at 191-92. Indeed, in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., the Colorado Attorney General had previously filed a complaint against the parties to the litigation for price fixing. See 472 U.S. 585, 591 n.9 (1985). Ski Co. thus found itself caught between the proverbial rock and a hard place, in that participation in the joint marketing scheme risked running afoul of section 1 of the Sherman Act, whereas refusal to participate in the joint marketing scheme risked running afoul of section 2.
96. See Hart & Tirole, supra note 60, at 212-13 (arguing that vertical merger in imperfectly competitive markets may avoid hold-up problem and encourage investment); Michael W. Klass & Michael A. Salinger, Do New Theories of Vertical Foreclosure Provide Sound Guidance for Consent Agreements in Vertical Merger Cases?, 40 Antitrust Bull. 667, 673 (1995) (describing ability of vertical mergers to reduce transaction costs associated with contracting); Riordan & Salop, supra note 60, at 522-27, 564 (discussing efficiency gains arising from optimal coordination between suppliers and purchasers, prevention of free riding, proper allocation of resources, and elimination of successive monopolies); Salinger, Market Foreclosure, supra note 60, at 349-50, 354-55 (acknowledging efficiency gains associated with elimination of double marginalization);
97. Ian Ayres, Vertical Integration and Overbuying: An Analysis of Foreclosure Via Raised Rivals' Costs 17-20, 23-24 (Am. Bar Found., Working Paper No. 8803, 1988) (discussing potential efficiency gains arising from increased production and more proper allocation of resources);
98. see also Thomas G. Krattenmaker & Steven C. Salop, Anticompetitive Exclusion: Raising Rivals' Costs to Achieve Power over Price, 96 Yale L.J. 209, 277-80 (1986) (conducting similar analysis with respect to vertical restraints). For discussions of the potential efficiencies associated with vertical exclusion in the context of the essential facilities doctrine, see 3A Areeda & Hovenkamp, supra note 4, ¶¶ 757-758, at 23-32, ¶ 787(b), at 298-99; Werden, supra note 4, at 462-65; Gerber, supra note 4, at 1085-87.
99. See Christopher S. Yoo, Beyond Network Neutrality, 19 Harv. J.L. & Tech. 1, 24-25 (2005) [hereinafter Yoo, Beyond Network Neutrality].
100. For the seminal analysis of successive monopolies, see generally Joseph J. Spengler, Vertical Integration and Antitrust Policy, 58 J. Pol. Econ. 347 (1950).
101. For important extensions, see M.L. Greenhut & H. Ohta, Related Market Conditions and Interindustrial Mergers, 66 Am. Econ. Rev. 267, 274 (1976) (arguing that vertical mergers between monopolistic input supplier and oligopolistic final good producers bring about greater output and lower prices);
102. M.L. Greenhut & H. Ohta, Vertical Integration of Successive Oligopolists, 69 Am. Econ. Rev. 137, 138-41 (1979) (finding that vertical mergers between successive oligopolists increase output and lower prices in market for final product);
103. Fritz Machlup & Martha Taber, Bilateral Monopoly, Successive Monopoly, and Vertical Integration, 27 Economica 101, 114-16 (1960) (arguing that vertical merger between successive monopolists or oligopolists, even in absence of monopsony or oligopsony, may increase output);
104. Salinger, Market Foreclosure, supra note 60, at 352-54 (arguing that vertical merger between successive oligopolists increases output and has indeterminate effect upon price of final good).
105. See Fishman v. Estate of Wirtz, 807 F.2d 520, 563 (7th Cir. 1986) (Easterbrook, J., dissenting) ("A merger of the two monopolists therefore makes consumers better off. Propositions about the economics of mergers often are filled with ifs and maybes; competing schools of thought produce different prescriptions. That successive monopolies injure consumers is a proposition on which there is unanimous agreement" (citations omitted)); Jean Tirole, The Theory of Industrial Organization 177 (1988) ("[W]elfare is unambiguously increased by the elimination of the double marginalization.").
106. On the profitability of using vertical integration to stem input substitution, see Bowman, supra note 66, at 25-27; M.L Burstein, A Theory of Full-Line Forcing, 55 Nw. U. L. Rev. 62, 68, 77-83 (1960);
107. Lionel W. McKenzie, Ideal Output and the Interdependence of Firms, 61 Econ. J. 785 (1951).
108. For the seminal welfare analysis of input substitution, see John M. Vernon & Daniel A. Graham, Profitability of Monopolization by Vertical Integration, 79 J. Pol. Econ. 924, 924-25 (1971).
109. See F.M. Scherer & David Ross, Industrial Market Structure and Economic Performance 523-24 (3d ed. 1990) ("The mathematical conditions underlying this result are complex . . . ."); Yoo, Vertical Integration, supra note 54, at 189-91 (reviewing literature on welfare effects).
110. See Martin K. Perry, Vertical Integration: Determinants and Effects, in 1 Handbook of Industrial Organization 183, 192 (Richard Schmalensee & Robert D. Willig eds., 1989) (noting that percentage welfare loss from input substitution appears to be less than "a couple of percent").
111. See id. ("[I]t is not clear that variable proportions raises a major policy issue on vertical integration."); David Reiffen & Michael Vita, Comment, Is There New Thinking on Vertical Mergers?, 63 Antitrust L.J. 917, 923 (1995) ("The variable proportions models of vertical integration seldom have been regarded as providing a sound basis for guiding vertical merger enforcement policy."); Salinger, Edgeworth's Paradox, supra note 61, at 554-55 ("[I]t is hard to imagine [the variable proportions] model as a serious basis for any public policy concern with vertical mergers.").
112. See R.H. Coase, The Nature of the Firm, 4 Economica 386 (1937).
113. See, e.g., Oliver Williamson, Markets and Hierarchies: Analysis and Antitrust Implications 26-30 (1975) (noting increase in contractual transaction costs associated with "selective or distorted information disclosure" and "self-disbelieved promises regarding future conduct").
114. See Yoo, Vertical Integration, supra note 54, at 192-200 (reviewing literature).
115. See Benjamin Klein, Robert G. Crawford & Armen A. Alchian, Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, 21 J.L. & Econ. 297, 298-99, 302-04 (1978) (discussing threat of opportunistic behavior, associated transaction costs, and resulting attractiveness of vertical integration).
116. See Lester G. Telser, Why Should Manufacturers Want Fair Trade?, 3 J.L. & Econ. 86, 91 (1960).
117. See id. at 94 ("[The manufacturer] may refuse to sell his product to any retailer who does not provide the requisite special services.").
118. See G. Frank Mathewson & Ralph A. Winter, An Economic Theory of Vertical Restraints, 15 RAND J. Econ. 27, 36 (1984) (arguing that territorial exclusivity can ameliorate free riding problem).
119. See supra note 81 and accompanying text. Klein, Crawford, and Alchian's prime example of the need for vertical integration instead of a vertical contractual restraint is GM's acquisition of Fisher Body. For other analyses that correct their account of this episode, see Ramon Casadesus-Masanell & Daniel F. Spulber, The Fable of Fisher Body, 43 J.L. & Econ. 67 (2000);
120. R.H. Coase, The Acquisition of Fisher Body by General Motors, 43 J.L. & Econ. 15, 24-30 (2000);
121. Robert F. Freeland, Creating Holdup Through Vertical Integration: Fisher Body Revisited, 43 J.L. & Econ. 33 (2000).
122. See, e.g., Joseph Farrell & Philip J. Weiser, Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Internet Age, 17 Harv. J.L. & Tech. 85, 107 (2003) (noting Baxter's role in articulating principle);
123. Paul L. Joskow & Roger G. Noll, The Bell Doctrine: Applications in Telecommunications, Electricity, and Other Network Industries, 51 Stan. L. Rev. 1249, 1249 (1999) (discussing centrality of doctrine to eventual judgment against AT&T).
124. 1984 Merger Guidelines § 4.23, 49 Fed. Reg. 26,823, 26,836 (June 29, 1984) ("Non-horizontal mergers may be used by monopoly public utilities subject to rate regulation as a tool for circumventing that regulation.").
125. See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 36 n.4 (1984) (O'Connor, J., concurring in judgment) ("In a regulated industry a firm with market power may be unable to extract a supercompetitive profit because it lacks control over the prices it charges for regulated products . . . . Tying may then be used to extract that profit from the sale of the unregulated, tied products . . . ."); Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370, 374 (7th Cir. 1986) (discussing incentive of provider of regulated service to avoid regulation by requiring purchase of vertically related service); Byars v. Bluff City News Co., 609 F.2d 843, 861 (6th Cir. 1979) ("[R]efusal to deal as part of a vertical integration scheme is anti-competitive . . . where integration facilitates evasion of regulation of monopoly profits."); Bowman, supra note 66, at 21-23 (describing use of tying arrangement to avoid price regulation); Timothy J. Brennan, Why Regulated Firms Should Be Kept Out of Unregulated Markets: Understanding the Divestiture in United States v. AT&T, 32 Antitrust Bull. 741, 746-64 (1987) (same); Farrell & Weiser, supra note 86, at 105-07 ("[T]he platform provider can compensate for the fact that its platform is priced below the profit-maximizing price by taking additional - and perhaps otherwise inefficient - profits in the applications market."); Joskow & Noll, supra note 86, at 1249-50 ("[R]egulated monopolies have the incentive and opportunity to monopolize related markets in which their monopolized service is an input . . . ."); Ratner, supra note 4, at 354 ("[Denial of access to an input] allows a regulated monopolist to skirt regulation by integrating into a downstream market and using its input monopoly to monopolize the downstream market.").
126. See, e.g., Daniel L. Brenner, Law and Regulation of Common Carriers in the Communications Industry 171-72 (2d ed. 1996) (noting that monopolist may be able to extract supracompetitive profit through misallocation of common costs);
127. Peter W. Huber et al., Federal Telecommunications Law § 2.2.1, at 92-96 (2d ed. 1999) (same);
128. Joseph Farrell, Creating Local Competition, 49 Fed. Comm. L.J. 201, 206-07 (1996) (same); Joskow & Noll, supra note 86, at 1267 (same);
129. Lawrence A. Sullivan, Elusive Goals Under the Telecommunications Act: Preserving Long Distance Competition upon Baby Bell Entry and Attaining Local Exchange Competition: We'll Not Preserve the One Unless We Attain the Other, 25 Sw. U. L. Rev. 487, 518-27 (1996) (same).
130. See 3A Areeda & Hovenkamp, supra note 4, ¶ 787(b), at 295-98, ¶ 787(c)(1), at 307-10 (arguing that essential facilities doctrine has increased importance in regulated industries as result of limitations it places upon monopolist's ability to exert power in downstream market); Ratner, supra note 4, at 354 (same); Werden, supra note 4, at 466-67, 470, 478 (same); Gerber, supra note 4, at 1087-88 (same).
131. See Developing a Unified Intercarrier Compensation Regime, Further Notice of Proposed Rulemaking, 20 F.C.C.R. 4685, 4791 (2005) ("[W]ireless networks . . . have not previously been subject to cost-based rate regulation."); Glenn A. Woroch, Open Access Rules and the Broadband Race, 2002 Mich. St. L. Rev. 719, 728 (noting that broadband has remained largely free of rate regulation).
132. See Timothy J. Tardiff, Changes in Industry Structure and Technological Convergence: Implications for Competition Policy and Regulation in Telecommunications 16-17, 26-28 (Oct. 1, 2006) (unpublished manuscript presented at the 34th Annual Telecommunications Policy Research Conference, on file with the Columbia Law Review), available at http://web.si.umich.edu/tprc/ papers/2006/560/tprc06art.pdf.
133. See id.
134. Sullivan & Grimes, supra note 3, § 3.1(b)(1), at 84.
135. Id. at 85.
136. Id.
137. See Joseph A. Schumpeter, Capitalism, Socialism and Democracy 84 (1942). For an example of commentary describing Trinko as Schumpeterian, see Philip J. Weiser, The Relationship of Antitrust and Regulation in a Deregulatory Era, 50 Antitrust Bull. 549, 551-54 (2005).
138. See Yoo, Beyond Network Neutrality, supra note 71, at 58-60.
139. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771 (b), at 172-73, ¶ 773(a), at 198, ¶ 773(b)(2), at 200-01, ¶ 774(c), at 216-17 (arguing that compelled access reduces incentive to develop independent capacity and, thereby, undermines potential for increased future competition); Hylton, supra note 4, at 1261, 1266 (discussing how sharing can discourage investments in cost-reducing facilities).
140. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771(b), at 172, ¶ 774(c), at 216-17 (arguing that, in absence of price regulation, compelled access does not preclude supracompetitive pricing); Ratner, supra note 4, at 373 (noting that monopoly pricing is stimulus to develop independent capacity).
141. See 3 Areeda & Hovenkamp, supra note 4, ¶ 720(b), at 256 (discussing decrease in incentive to develop facilities arising from price regulation).
142. See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Notice of Proposed Rulemaking, 11 F.C.C.R. 14171, 14173-74 ¶ 4 (1996).
143. See Areeda, supra note 4, at 852.
144. See 3A Areeda & Hovenkamp, supra note 4, ¶ 774(c), at 216 (showing that essential facilities doctrine can be anticompetitive when "the facility can be duplicated or some substitute developed, even in the relatively long run" (emphasis added)).
145. See James C. Cooper et al., Vertical Antitrust Policy as a Problem of Inference, 23 Int'l J. Indus. Org. 639, 648-58 (2005).
146. See Francine Lafontaine & Margaret Slade, Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy, in Handbook of Antitrust Economics (Paolo Buccirossi ed., forthcoming 2007) (manuscript at 21-22, on file with the Columbia Law Review), available at http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/ slade/wp/ecsept2005. pdf.
147. Id.
148. Id. (manuscript at 21-23).
149. For overviews of this literature, see Christopher S. Yoo, Network Neutrality and the Economics of Congestion, 94 Geo. L.J. 1847, 1885-87 (2006) [hereinafter Yoo, Network Neutrality and Congestion];
150. Yoo, Vertical Integration, supra note 54, at 187-205.
151. See Ford Motor Co. v. United States, 405 U.S. 562, 568, 578 (1972) (striking down vertical merger resulting in 10% foreclosure); Brown Shoe Co. v. United States, 370 U.S. 294, 303, 327, 331-34 (1962) (striking down vertical merger between shoe manufacturer with 4% of U.S. market and shoe retailer with less than 2% of U.S. market).
152. Merger Guidelines § 12 (May 30, 1968), reprinted in 4 Trade Reg. Rep. (CCH) ¶ 13,101 (1988), available at http://www.usdoj.gov/atr/hmerger/ 11247.pdf (on file with the Columbia Law Review).
153. On resale price maintenance, see Albrecht v. Herald Co., 390 U.S. 145, 149-54 (1968), overruled by State Oil Co. v. Khan, 522 U.S. 3 (1997); Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373, 398-409 (1911), overruled by Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007). On tying, see Former Enters., Inc. v. U.S. Steel Corp., 394 U.S. 495, 498-99 (1969); United States v. Loew's, Inc., 371 U.S. 38, 45 (1962); N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5-7 (1958); Int'l Salt Co. v. United States, 332 U.S. 392, 396-98 (1947); IBM Corp. v. United States, 298 U.S. 131, 134-40 (1936). On territorial exclusivity, see United States v. Topco Assocs., Inc., 405 U.S. 596, 607-08 (1972); United States v. Arnold, Schwinn & Co., 388 U.S. 365, 379-80 (1967), overruled by Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977).
154. See, e.g., Standard Oil Co. v. United States, 337 U.S. 293, 295, 314 (1949) (holding that exclusive dealing contracts may be held illegal even absent proof of any tendency to create monopoly and that foreclosure of 16% of market was sufficient to render exclusive dealing contract illegal); Brown Shoe Co., 62 F.T.C. 679, 687 ¶ 10, 691 ¶ 33 (1963) (invalidating exclusive dealing arrangement even though it only foreclosed less than 1% (766 of nearly 100,000) of retail outlets), rev'd, 339 F.2d 45 (8th Cir. 1964), rev'd, 384 U.S. 316 (1966).
155. See United States v. Griffith, 334 U.S. 100, 106-08 (1948).
156. Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 276 (2d Cir. 1979).
157. See Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1024 n.11 (10th Cir. 2002) (recognizing circuit split); Eleven Line, Inc. v. N. Tex. State Soccer Ass'n, 213 F.3d 198, 206 n.16 (5th Cir. 2000) (same). See generally 3 Areeda & Hovenkamp, supra note 4, ¶ 652(b)(2), at 93-95 (collecting cases).
158. See Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 34-35 (2006); Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 462, 464, 481 (1992); Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12-15 (1984); U.S. Steel Corp. v. Fortner Enters., Inc., 429 U.S. 610, 620 (1977); accord Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 296-97 (1985) (applying equivalent requirement to group boycotts).
159. See, e.g., MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1132 (7th Cir. 1983) (including among requirements of essential facilities doctrine "competitor's inability practically or reasonably to duplicate the essential facility"); Hecht v. Pro-Football, Inc., 570 F.2d 982, 992 (D.C. Cir. 1977) (noting that doctrine applies only "'where facilities cannot practicably be duplicated by would-be competitors'" (quoting Neale, supra note 23, at 67)); 3A Areeda & Hovenkamp, supra note 4, ¶ 773(b)(2), at 200-01 (collecting cases).
160. See Ill. Bell Tel. Co. v. Haines & Co., 905 F.2d 1081, 1087 (7th Cir. 1990) ("The owner of an essential facility is defined as one who, for all practical purposes, possesses a monopoly . . . ."), vacated, 499 U.S. 944 (1991); City of Malden v. Union Elec. Co., 887 F.2d 157, 160 n.4 (8th Cir. 1989) (noting requirement of "possession of monopoly power in the relevant market" in essential facilities claim); Consul, Ltd. v. Transco Energy Co., 805 F.2d 490, 494-95 (4th Cir. 1986) (finding that, even with regard to essential facilities claim, "relevant market must be proven" in which "defendant has market power").
161. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 388 (1999).
162. 47 U.S.C. § 251(d)(2) (2000).
163. Iowa Utils. Bd., 525 U.S. at 388.
164. Id. at 428 (Breyer, J., concurring in part and dissenting in part).
165. See id. at 389-92 (majority opinion); id. at 428 (Breyer, J., concurring in part and dissenting in part).
166. See Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 1001-02 (2005) (upholding FCCs decision that availability of broadband services from other sources justified refusal to impose access requirements on cable modem systems); U.S. Telecom Ass'n v. FCC, 290 F.3d 415, 428-29 (D.C. Cir. 2002) (rejecting order requiring unbundling of DSL-compatible portion of telephone lines because of order's failure to take into account competition from cable modem systems).
167. 1984 Merger Guidelines § 4.213, 49 Fed. Reg. 26,823, 26,836 (June 29, 1984) ("The Department is unlikely to challenge a merger on this ground unless overall concentration of the primary market is above 1800 HHI . . . .").
168. The 1992 statement that accompanied the issuance of the new Horizontal Merger Guidelines indicated that section 4 of the 1984 Guidelines continued to provide the relevant guidance for nonhorizontal mergers. See 1992 Horizontal Merger Guidelines, 57 Fed. Reg. 41,552, 41,552 (Sept. 10, 1992).
169. The Clinton Administration considered revising the Non-Horizontal Merger Guidelines but chose not to do so. See Yoo, Vertical Integration, supra note 54, at 201 n.122.
170. See Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 462, 464, 481 (1992) (noting that tying arrangement will constitute antitrust violation "if the arrangement affects a substantial volume of commerce in the tied market"); Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12-16 (1984) (noting requirement that "substantial volume of commerce [be] foreclosed" by tying arrangement).
171. 506 U.S. 447, 459 (1993); accord Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224-25 (1993) ("Earlier this Term, we held in the Sherman Act § 2 context . . . that the plaintiff [must] prove 'a dangerous probability that [the defendant] would monopolize a particular market.'" (quoting Spectrum Sports, 506 U.S. at 459)).
172. See Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 546-47 (9th Cir. 1991) (requiring evidence that defendant "obtain[ed], or attempt[ed] to attain, a monopoly in the downstream . . . market").
173. 1984 Merger Guidelines §§ 4.211-4.212, 49 Fed. Reg. at 26,835-36.
174. See Jefferson Parish, 466 U.S. at 36 (O'Connor, J., concurring in judgment) ("The existence of a tied product normally does not increase the profit that the seller with market power can extract from sales of the tying product").
175. See, e.g., Byars v. Bluff City News Co., 609 F.2d 843, 861 (6th Cir. 1979) ("[T]here exists one profit-maximizing monopoly price to the consumer of any given product").
176. See State Oil Co. v. Khan, 522 U.S. 3, 18 (1997) (rejecting treatment of vertical maximum price restraints as per se violation of antitrust laws); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 762-63 (1984) (recognizing promotion of sales training and presale services as justification for vertical restraint); Cont'l T. V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 54-55 (1977) (recognizing that vertical restraints can "allow[] the manufacturer to achieve certain efficiencies in the distribution of his products," such as recruiting new distributors and encouraging promotional, service, and repair services).
177. See Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 609-11 (1985).
178. See, e.g., City of Vernon v. S. Cal. Edison Co., 955 F.2d 1361, 1365-67 (9th Cir. 1992) (allowing legitimate business justification as defense for refusal to deal); Illinois ex rel. Burris v. Panhandle E. Pipe Line Co., 935 F.2d 1469, 1481-82 (7th Cir. 1991) (same); Byars, 609 F.2d at 862-63 (same); 3A Areeda & Hovenkamp, supra note 4, ¶ 773(e), at 209-13 (collecting cases).
179. 1984 Merger Guidelines § 4.24, 49 Fed. Reg. 26,823, 26,837 (June 29, 1984).
180. Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 549 (9th Cir. 1991).
181. See infra Part III.B.
182. For an overview of these doctrines, see Huber et al., supra note 89, §§ 4.3.2-.6, at 338-49.
183. See infra Part II.B.4.
184. This provision was originally enacted as part of the Willis-Graham Act, ch. 20, 42 Stat. 27, 27-28 (1921). It was subsequendy incorporated into the Communications Act of 1934, ch. 652, § 221(a), 48 Stat. 1064, 1080 (previously codified at 47 U.S.C. § 221(a) (1994)). It was eventually repealed by the Telecommunications Act of 1996, Pub. L. No. 104-104, § 601(b)(2), 110 Stat. 56, 143.
185. See, e.g., Indus. Commc'ns Sys., Inc. v. Pac. Tel. & Tel. Co., 505 F.2d 152, 156 (9th Cir. 1974) (noting that exemptions have been read narrowly and do not create unconditional immunity).
186. See, e.g., Credit Suisse Sec. (USA) LLC v. Billing, 127 S. Ct. 2383, 2392 (2007) (offering Court's most recent statement of this principle).
187. Gordon v. N.Y. Stock Exch., 422 U.S. 659, 682 (1975).
188. Id. (quoting United States v. Phila. Nat'l Bank, 374 U.S. 321, 351 (1963)).
189. Id. at 683 (quoting Silver v. N.Y. Stock Exch., 373 U.S. 341, 357 (1963)); accord Nat'l Gerimedical Hosp. & Gerontology Ctr. v. Blue Cross of Kan. City, 452 U.S. 378, 388-89 (1981) (calling these general principles "well established").
190. See, e.g., Gordon, 422 U.S. at 692-93 (Stewart, J., concurring) ("The Court has never held . . . that the antitrust laws are inapplicable to anticompetitive conduct simply because a federal agency has jurisdiction over the activities of . . . the defendants. . . . The mere existence of the Commission's reserve power of oversight . . . does not necessarily immunize those rules from antitrust attack.").
191. 358 U.S. 334, 345-46 (1959).
192. Otter Tail Power Co. v. United States, 410 U.S. 366, 372-75 (1973).
193. Id. at 374.
194. For cases holding that regulations governing the interconnection of local and long distance services did not impliedly immunize conduct from the antitrust laws, see S. Pac. Commc'ns Co. v. AT&T Co., 740 F.2d 980, 999-1000 (D.C. Cir. 1984); MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1101-05 (7th Cir. 1983); Mid-Tex. Commc'ns Sys., Inc. v. AT&T Co., 615 F.2d 1372, 1377-81 (5th Cir. 1980); United States v. AT&T Co., 461 F. Supp. 1314, 1320-30 (D.D.C. 1978). For a similar decision regarding the interconnection of paging systems, see Indus. Commc'ns Sys., Inc. v. Pac. Tel. & Tel. Co., 505 F.2d 152, 156 (9th Cir. 1974). For similar decisions regarding the interconnection of CPE, see Phonetele, Inc. v. AT&T Co., 664 F.2d 716, 726-35 (9th Cir. 1981), modified, 1982 WL 11277 (9th Cir. Mar. 15, 1982); Ne. Tel. Co. v. AT&T Co., 651 F.2d 76, 82-84 (2d Cir. 1981); Sound, Inc. v. AT&T, 631 F.2d 1324, 1327-31 (8th Cir. 1980); Essential Commc'ns Sys., Inc. v. AT&T Co., 610 F.2d 1114, 1116-25 (3d Cir. 1979); Jarvis, Inc. v. AT&T Co., 481 F. Supp. 120, 123-24 (D.D.C. 1978); Int'l Tel. & Tel. Corp. v. Gen. Tel. & Elecs. Corp., 449 F. Supp. 1158, 1163-69 (D. Haw. 1978); Macom Prods. Corp. v. AT&T Co., 359 F. Supp. 973, 976 (C.D. Cal. 1973). The only exceptions are two district court decisions that were later overturned on appeal, see Phonetele, Inc. v. AT&T Co., 435 F. Supp. 207 (C.D. Cal. 1977), rev'd, 664 F.2d 716; Dasa Corp. v. Gen. Tel. Co., 1977-2 Trade Cas. (CCH) ¶ 61,610 (C.D. Cal. May 10, 1977), rev'd sub nom. Phonetele, 664 F.2d 716, and a third, thinly reasoned decision that relied entirely on the authority of the two previous decisions, see Monitor Bus. Machs. v. AT&T Co., 1978-1 Trade Cas. (CCH) ¶ 62,030 (C.D. Cal. May 5, 1978) (relying on Phonetele and Dasa).
195. 47 U.S.C. § 201(a) (2000).
196. See supra notes 149-150 and accompanying text.
197. See United States v. AT&T Co., 461 F. Supp. at 1326.
198. See MCI, 708 F.2d at 1103-05 (holding antitrust immunity inapposite because "the initial decision whether to interconnect rests with the utility, and the record shows that the FCC did not control or approve of AT & T's actions here"); Phonetele, 664 F.2d at 733-34 (rejecting antitrust immunity when FCC permitted tariff to go into effect while agency conducted its own review of interconnection-related issues); Sound, 631 F.2d at 1330-31 (finding that decisions based upon the business judgment of firm rather than regulatory mandate are not exempted from antitrust laws); Essential Commc'ns, 610 F.2d at 1124 (drawing support for lack of exemption from agency failure to rule on tariff application); United States v. AT&T Co., 461 F. Supp. at 1326-28 (describing inability of FCC to review all tariff filings and weakness of FCCs regulatory regime); Jarvis, 481 F. Supp. at 123-24 (noting lack of formal approval of tariffs by FCC).
199. 317 U.S. 341 (1943).
200. Cal. Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (quoting City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 410 (1978)).
201. Patrick v. Burget, 486 U.S. 94, 100-01 (1988) (citations omitted).
202. See FTC v. Ticor Title Ins. Co., 504 U.S. 621, 638 (1992) ("The mere potential for state supervision is not an adequate substitute for a decision by the State. . . . In the absence of active supervision in fact, there can be no state-action immunity for what were otherwise private price-fixing arrangements.").
203. See DFW Metro Line Servs. v. Sw. Bell Tel. Co., 901 F.2d 1267, 1269 n.6 (5th Cir. 1990); Davis v. S. Bell Tel. & Tel. Co., 755 F. Supp. 1532, 1539-42 (S.D. Fla. 1991); Metro Mobile CTS, Inc. v. NewVector Commc'ns, Inc., 661 F. Supp. 1504, 1508-21 (D. Ariz. 1987), aff'd on other grounds, 892 F.2d 62 (9th Cir. 1989); Sonitrol of Fresno, Inc. v. AT&T Co., 629 F. Supp. 1089, 1094-1101 (D.D.C. 1986).
204. For long distance services, see Mid-Tex. Commc'ns Sys., Inc. v. AT&T Co., 615 F.2d 1372, 1381-82 (5th Cir. 1980); United States v. AT&T Co. (Modification of Final Judgment), 552 F. Supp. 131, 156-59 (D.D.C. 1982), aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983). For CPE, see Phonetele, Inc. v. AT&T Co., 664 F.2d 716, 735-37 (9th Cir. 1981); Sound, Inc. v. AT&T Co., 631 F.2d 1324, 1331-35 (8th Cir. 1980); Essential Commc'ns Sys., Inc. v. AT&T Co., 610 F.2d 1114, 1125 (3d Cir. 1979); Jarvis, Inc. v. AT&T Co., 481 F. Supp. 120, 124 (D.D.C. 1978).
205. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 378 n.6 (1999).
206. See supra notes 92-93 and accompanying text.
207. See Burford v. Sun Oil Co., 319 U.S. 315, 317-18 (1943) (establishing doctrine); Paul M. Bator et al., Hart & Wechsler's The Federal Courts and the Federal System 1364 (3d ed. 1988) (calling form of abstention initiated by Burford "administrative abstention" (internal quotation marks omitted)).
208. County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 189 (1959); accord Zwickler v. Koota, 389 U.S. 241, 249 n.11 (1967) (noting possibility of abstention "in cases involving possible disruption of complex state administrative processes"); Lumbermen's Mut. Cas. Co. v. Elbert, 348 U.S. 48, 53 (1954) (characterizing Burford as decision "to avoid a potential interference with a state's administrative policy-making process").
209. New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 361 (1989) (quoting Colo. River Water Conservation Dist v. United States, 424 U.S. 800, 814 (1976)).
210. See GTE N., Inc. v. Strand, 209 F.3d 909, 920-21 (6th Cir. 2000) ("[T]o abstain pending state review of GTE's claims would be inappropriate because the dictates of [state law] are clear . . . .").
211. See Bell Atl.-Pa., Inc. v. Pa. Pub. Util. Comm'n, 107 F. Supp. 2d 653, 665-66 (E.D. Pa. 2000) (finding Burford abstention inapplicable where issue concerned assertion of federal control over state regulation).
212. See Younger v. Harris, 401 U.S. 37, 44 (1971).
213. See id. at 46.
214. See Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 431-37 (1982) (finding that bar disciplinary hearings implicate important state interests, justifying abstention).
215. See Ohio Civil Rights Comm'n v. Dayton Christian Sch., Inc., 477 U.S. 619, 627-28 (1986) (treating elimination of sex discrimination as significant state interest).
216. See Rizzo v. Goode, 423 U.S. 362, 378-80 (1976) (discussing federalism concerns raised by federal judicial interference with state criminal proceeding).
217. New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 370-71 (1989) (discussing analytical framework for determining whether agency action is legislative or judicial in nature).
218. See GTE N., Inc. v. Strand, 209 F.3d 909, 921 (6th Cir. 2000) (finding Younger abstention inapplicable where only forward-looking state agency proceedings are ongoing); Bell Atl.-Pa., Inc. v. Pa. Pub. Util. Comm'n, 107 F. Supp. 2d 653, 666 (E.D. Pa. 2000) (same).
219. See, e.g., Ricci v. Chi. Mercantile Exch., 409 U.S. 289, 302-06 (1973) (staying action pending resolution of agency proceeding where certain facets of dispute fell within statutory jurisdiction of agency and resolution would aid overall resolution); Pan Am. World Airways, Inc. v. United States, 371 U.S. 296, 309-12 (1963) (dismissing claim more properly falling within statutory jurisdiction of agency); United States v. W. Pac. R.R., 352 U.S. 59, 65-69 (1956) (allocating responsibility for undertaking initial resolution of disputed issues to agency where disputed facts fall within agency, and outside judicial, competence).
220. United States v. Radio Corp. of Am. (RCA) 358 U.S. 334, 348 (1959).
221. For an invocation of primary jurisdiction in an antitrust suit challenging AT&T's refusal to allow independent long distance companies to connect with its network, see MCI Commc'ns Corp. v. AT&T Co., 496 F.2d 214, 219-24 (3d Cir. 1974). For invocations of primary jurisdiction in the context of CPE, see Carter v. AT&T Co., 250 F. Supp. 188, 190-92 (N.D. Tex. 1966), aff'd, 365 F.2d 486 (5th Cir. 1966); Huber et al., supra note 89, § 8.4.1.1, at 664-65 (collecting cases); see also Carter, 365 F.2d at 498 n.23 (citing four unreported district court cases in which courts invoked doctrine of primary jurisdiction when confronted with antitrust challenge to foreign attachments tariff).
222. See United States v. AT&T Co., 461 F. Supp. 1314, 1329, 1336, 1349-50 (D.D.C. 1978); United States v. AT&T Co., 427 F. Supp. 57, 61-62 (D.D.C. 1976).
223. United States v. Nat'l Ass'n of Sec. Dealers, 422 U.S. 694, 734 (1975).
224. In the words of the Supreme Court: In this case we are asked to hold that private conduct required by state law is exempt from the Sherman Act. Two quite different reasons might support such a rule. First, if a private citizen has done nothing more than obey the command of his state sovereign, it would be unjust to conclude that he has thereby offended federal law. Second, if the State is already regulating an area of the economy, it is arguable that Congress did not intend to superimpose the antitrust laws as an additional, and perhaps conflicting, regulatory mechanism. Cantor v. Detroit Edison Co., 428 U.S. 579, 592 (1976).
225. See Burford v. Sun Oil Co., 319 U.S. 315, 327 (1943) (observing how "double system" of state administrative and federal judicial review can lead to "[d]elay, misunderstanding of local law, and needless federal conflict with the state policy").
226. See United States v. Radio Corp. of Am. (RCA), 358 U.S. 334, 346 (1959) (noting that primary jurisdiction was "grounded on the necessity for administrative uniformity"); id. at 347-48 (noting that some primary jurisdiction decisions "emphasized the need for administrative uniformity and uniform rates" (citing Keogh v. Chi. & Nw. Ry. Co., 260 U.S. 156 (1922))).
227. Parker v. Brown, 317 U.S. 341, 351 (1943).
228. Younger v. Harris, 401 U.S. 37, 44 (1971).
229. Cantor, 428 U.S. at 596-97 (footnote omitted).
230. RCA, 358 U.S. at 346 (quoting Great N. Ry. Co. v. Merchs.' Elevator Co., 259 U.S. 285, 291 (1922)); accord id. at 348 (emphasizing "the need for administrative experience in distilling the relevant facts in a complex industry as a foundation for later court action" (citing United States Navigation Co. v. Cunard S.S. Co., 284 U.S. 474 (1932); Far E. Conference v. United States, 342 U.S. 570 (1952); Fed. Mar. Bd. v. Isbrandsten Co., 356 U.S. 481, 497-99 (1958))).
231. Burford v. Sun Oil Co., 319 U.S. 315, 327 (1943).
232. MCI Commc'ns Corp. v. AT&T Co., 496 F.2d 214, 220 (3d Cir. 1974).
233. See, e.g., 3A Areeda & Hovenkamp, supra note 4, ¶ 774(3), at 223-24 (noting that the essential facilities doctrine requires courts to oversee disputes over the price of access to the facility); Hovenkamp, supra note 4, § 7.7(d)(1), at 313 ("[C]ompelling a single firm to deal requires a court to set terms and conditions of the sale, thus turning it into a kind of regulatory agency."); Richard A. Posner, Antitrust Law: An Economic Perspective 208, 211 (1976) [hereinafter Posner, Antitrust Law] (noting that "[i]t is difficult to understand how [the decree in Terminal Railroad] protects the public; its purpose and effect are, rather, to let the defendants' competitors share in the monopoly position enjoyed by the defendants" and that by ordering the defendant to deal, "[t]he antitrust court becomes charged with the detailed and continuous supervision of an ongoing commercial relationship, a function that courts are ill equipped to perform effectively"); Sullivan & Grimes, supra note 3, § 3.4(b) (3), at 125 ("[W]ithout some control on rates, the relief accorded to [plaintiffs] could be meaningless.").
234. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771(b), at 171-73 (arguing that compelled sharing fails to decrease price or to increase output while perpetuating the monopoly by reducing or removing incentives to invest in alternative network capacity); Posner, Antitrust Law, supra note 190, at 208 (noting that decree mandating nondiscriminatory access merely accomplishes distribution of monopoly profit without social benefit); Areeda, supra note 4, at 852 (claiming that compelled sharing is unlikely to increase competition where "the plaintiff merely substitutes itself for the monopolist or shares the monopolist's gains").
235. See 3 Areeda & Hovenkamp, supra note 4, ¶ 720(b), at 256-58.
236. 273 U.S. 392, 397-98 (1927).
237. Id. at 398.
238. See Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 647 (1980) (citing Trenton Potteries, 273 U.S. at 397-98, and United States v. Trans-Mo. Freight Ass'n, 166 U.S. 290, 340-41 (1897), as authorities for declining to evaluate the reasonableness of prices); United States v. Masonite Corp., 316 U.S. 265, 281-82 (1942) ("As in case of an appraisal of the reasonableness of prices which are fixed, such a determination could satisfactorily be made 'only after a complete survey of our economic organization and a choice between rival philosophies' and only after weighing a host of intangibles." (quoting Trenton Potteries, 273 U.S. at 398)); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 212-14 (1940) (reiterating principle that determination of reasonable price involves broad and sweeping factual investigation beyond competence of court); Cline v. Frink Dairy Co., 274 U.S. 445, 462-63 (1927) (same); Chi. Prof'l Sports Ltd. P'ship v. NBA, 95 F.3d 593, 597 (7th Cir. 1996) ("[T]he antitrust laws do not deputize district judges as one-man regulatory agencies."); Town of Concord v. Boston Edison Co., 915 F.2d 17, 25 (1st Cir. 1990) ("[H]ow is a judge . . . to determine a 'fair price?' Is it the price charged by other suppliers . . . ? None exist. Is it the price that competition 'would have set' were the primary level not monopolized? How can the court determine this price . . . without acting like a rate-setting regulatory agency . . . ?"); cf. Trans-Mo. Freight Ass'n, 166 U.S. at 331-42 (pre-Trenton Potteries decision citing difficulties in determining reasonableness of rates as justification for "leav[ing] the question of reasonableness to the companies themselves"). See generally 3 Areeda & Hovenkamp, supra note 4, ¶ 720(b), at 256-58 (reviewing these arguments and collecting cases).
239. Areeda, supra note 4, at 853. Areeda acknowledged that compelling access is more justifiable where the monopolist is a consortium that can admit additional members or where a regulatory agency already exists to control the terms of dealing. See id.
240. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771(b), at 171-72, ¶ 773(a), at 197; see also id. ¶ 765(c), at 101, ¶ 774(e), at 224-27 (describing inability of courts to determine proper price and judicial reluctance to even attempt to do so).
241. Id. ¶ 774(e), at 224; see also id. ¶ 765(c), at 101-02, ¶ 772(d), at 194 (noting that remedies inevitably involve regulating prices and terms of sale and that courts are ill suited to such tasks).
242. See id. ¶ 774(e), at 227 n.44, ¶ 782(k), at 281-82 (listing cases in which parties litigated nonprice terms of compelled access and describing potential of monopolists to abuse litigation).
243. See id. ¶ 774(e), at 223.
244. Id. ¶ 771(b), at 172; accord id. ¶ 772(d), at 194, ¶ 773(a), at 198, ¶ 774(e), at 227-28 (favoring alternative remedies or even no remedy at all when courts would otherwise be required to undertake regulatory functions).
245. See Hylton, supra note 4, at 1283-84 (proposing presumption against plaintiffs where claim requires court to engage in problems as difficult as price regulation); Werden, supra note 4, at 460-61 (noting conclusion of various commentators that difficulty of providing relief should cause courts to avoid intervention in absence of regulation). But see Ratner, supra note 4, at 370-72, 376-78 (recognizing that antitrust courts are not well suited to regulate price, but arguing that intervention is only meaningful remedy available to increase output toward competitive levels).
246. Compare Kevin J. O'Connor, The Divestiture Remedy in Sherman Act § 2 Cases, 13 Harv. J. on Legis. 687, 692-93 (1976) (advocating structural over conduct remedies),
247. with Robert W. Crandall, The Failure of Structural Remedies in Sherman Act Monopolization Cases, 80 Or. L. Rev. 109, 109-15 (2001) (arguing that structural remedies provide insufficient benefit to consumers),
248. and Thomas A. Piraino, Identifying Monopolists' Illegal Conduct Under the Sherman Act, 75 N.Y.U. L. Rev. 809, 879-83 (2000) (criticizing judicial use of structural remedies as failing to consider underlying market conditions and requiring expertise lacking in courts). This debate has gained new salience with the proposal of structural relief in the Microsoft case.
249. See John E. Lopatka & William H. Page, Devising a Microsoft Remedy That Serves Consumers, 9 Geo. Mason L. Rev. 691, 707-08 (2001) (arguing that structural remedies in Microsoft are ineffective and counterproductive); Piraino, supra, at 883-91 (noting proposal of structural remedies, but arguing for imposition of conduct remedies);
250. R. Craig Romaine & Steven C. Salop, Slap Their Wrists? Tie Their Hands? Slice Them Into Pieces? Alternative Remedies for Monopolization in the Microsoft Case, Antitrust, Summer 1999, at 15, 16-22 (discussing proposed structural and conduct remedies);
251. Howard A. Shelanski & J. Gregory Sidak, Antitrust Divestiture in Network Industries, 68 U. Chi. L. Rev. 1, 73-90 (2001) (arguing that lack of necessary information renders choice between structural and conduct remedies on economic efficiency grounds impossible).
252. See Richard A. Posner, A Statistical Study of Antitrust Enforcement, 13 J.L. & Econ. 365, 386-88 (1970) [hereinafter Posner, Statistical Study].
253. For an updated analysis, see Richard A. Posner & Frank H. Easterbrook, Antitrust: Cases, Economic Notes and Other Materials 761-63 (2d ed. 1981).
254. See Posner, Statistical Study, supra note 204, at 388.
255. Id.
256. Posner & Easterbrook, supra note 204, at 762-63.
257. See 3A Areeda & Hovenkamp, supra note 4, ¶ 774(e), at 225 ("[T]he few decisions that have granted relief never offer detailed directives for dealing."); Werden, supra note 4, at 460-61 (noting that courts generally have not addressed difficulties of providing remedies).
258. See Terminal R.R. Ass'n v. United States, 266 U.S. 17, 27 (1924); Terminal R.R. Ass'n v. United States, 236 U.S. 194, 195-96 (1915); Ex parte United States, 226 U.S. 420, 421 (1913); see also Lipsky & Sidak, supra note 4, at 1196-98 (discussing continuing judicial involvement and repeated
259. See 3A Areeda & Hovenkamp, supra note 4, ¶ 772(d), at 194.
260. Over the course of the litigation, the company originally named NYNEX first merged with Bell Adantic and thn merged with GTE to form a new corporation called Verizon. We will follow the Supreme Court's convention by referring to all of these entities as Verizon. See Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 402 n.1 (2004).
261. Id. at 402-05.
262. See id. at 406-10, 411-15 (discussing economic and institutional criticisms of judicial intervention in context of unilateral refusal to deal).
263. Id. at 407.
264. Id.
265. See id. ("Firms may acquire monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers.").
266. Id. at 407-08 (noting that some monopoly power is necessary to preserve principles of free market system).
267. Id. at 414 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986)).
268. Id. at 407-08.
269. Id. at 408, 414.
270. Id. at 408 (alteration in original) (quoting United States v. Colgate & Co., 250 U.S. 300, 307 (1919)).
271. Id. (alteration in original) (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 601 (1985)).
272. Id.
273. Id. at 409.
274. Id.
275. Id. at 409-10.
276. Id. at 409.
277. Id. at 410.
278. See id.
279. See Tom Campbell & Nirit Sandman, A New Test for Predation: Targeting, 52 UCLA L. Rev. 365, 388 (2004) (noting lack of economic significance attached to existence of prior business relationship); John E. Lopatka & William H. Page, Bargaining and Monopolization: In Search of the "Boundary of Section 2 Liability" Between Aspen and Trinko, 73 Antitrust L.J. 115, 142-44 (2005) (discussing several reasons for disregarding prior existence of business relationship, focusing primarily upon dynamic market conditions and lack of impact of short-term actions).
280. See MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124, 1132 (9th Cir. 2004) (noting that defendant changed prior business practice after determining that it was causing "significant[] negative impact on its own profitability" (internal quotation marks omitted)).
281. See Eleanor M. Fox, Is There Life in Aspen After Trinko? The Silent Revolution of Section 2 of the Sherman Act, 73 Antitrust L.J. 153, 160 (2005) ("Monopoly firms would hesitate to cooperate in the first instance; the law would put a premium on old ways of doing things.").
282. See 3A Areeda & Hovenkamp, supra note 4, ¶ 772(c)(2), at 188 (noting that existence of prior arrangements in market under dispute, as well as similar arrangements in other markets, "indicate[s] that [these arrangements] satisfy consumer desire and are optimally efficient"); see also id. ¶ 772(c)(3), at 190-91 (proposing that limiting Aspen to preexisting joint ventures renders scope of liability and remedies more tractable).
283. Trinko, 540 U.S. at 411.
284. Id. at 408.
285. See supra note 128 and accompanying text.
286. Trinko, 540 U.S. at 415 n.4 (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 459 (1993)).
287. See Philip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 652, at 190, ¶ 773(g), at 302-03 (2d ed. Supp. 2007) (reading Trinko to require proof of "'dangerous probability of success' in monopolizing the second market") (quoting Trinko, 540 U.S. at 415 n.4)); Kauper, supra note 35, at 1629 (noting requirement of market concentration).
288. See Trinko, 540 U.S. at 406.
289. Id. (quoting United States v. Nat'l Ass'n of Sec. Dealers, 422 U.S. 694, 734 (1975)).
290. 47 U.S.C. § 152 note (2000).
291. See, e.g., Goldwasser v. Ameritech Corp. 222 F.3d 390, 401 (7th Cir. 2000) ("The antitrust laws would add nothing to the oversight already available under the 1996 law. . . . [T]he 1996 Act imposes duties on the ILECs that are not found in the antitrust laws.").
292. Trinko, 540 U.S. at 406.
293. Id. at 408.
294. Id. at 412-13.
295. Id. at 414; see also id. (noting that mandating access under section 2 "'can be difficult' because 'the means of illicit exclusion, like the means of legitimate competition, are myriad'" (quoting United States v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001) (en banc) (per curiam))).
296. Id. (quoting Brief of New York et al. as Amici Curiae Supporting Respondent at 10, Trinko, 540 U.S. 398 (No. 02-682)).
297. Id.
298. Id. (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986)).
299. Id. at 414-15 (quoting Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223 (1993)).
300. Id. at 415 (citing Areeda, supra note 4, at 853).
301. Id.
302. See, e.g., Joseph P. Bauer, Refusals to Deal with Competitors by Owners of Patents and Copyrights: Reflections on the Image Technical and Xerox Decisions, 55 DePaul L. Rev. 1211, 1228 (2006) (noting that Trinko called essential facilities doctrine "into serious question"); Fox, supra note 232, at 154 (claiming that Trinko "nearly obliterated" essential facilities doctrine);
303. Damien Geradin & Robert O'Donoghue, The Concurrent Application of Competition Law and Regulation: The Case of Margin Squeeze Abuses in the Telecommunications Sector, 1 J. Competition L. & Econ. 355, 396 n.104 (2005) (arguing that Trinko "cast[s] serious doubt on future reliance on the 'essential facilities' doctrine");
304. Michael Jacobs, Introduction, 55 DePaul L. Rev. 1177, 1183 (2006) (noting that Trinko "cast[s] very serious doubt on the vitality of [the essential facilities] doctrine");
305. James A. Keyte, The Ripple Effects of Trinko: How It Is Affecting Section 2 Analysis, Antitrust, Fall 2005, at 44, 44 (noting that Trinko "clearly signaled that the demise of the essential facilities doctrine . . . may be on the horizon");
306. Roger G. Noll, "Buyer Power" and Economic Policy, 72 Antitrust L.J. 589, 613 n.47 (2005) (noting that Trinko "all but abandoned the essential facilities doctrine");
307. Howard A. Shelanski, Adjusting Regulation to Competition: Toward a New Model for U.S. Telecommunications Policy, 24 Yale J. on Reg. 55, 101 (2007) (noting "the absence . . . of a meaningful essential-facilities doctrine in U.S. antitrust law" after Trinko).
308. Trinko, 540 U.S. at 415 (quoting Areeda, supra note 4, at 853).
309. See supra Part II.B.
310. See George A. Hay, Trinko: Going All the Way, 50 Antitrust Bull. 527, 528, 537, 539-47 (2005) (arguing that reasoning underlying Trinko, if fully adopted, renders judicial interference with unilateral refusal to deal rarely, if ever, appropriate).
311. See supra Part II.B.
312. Weiser, supra note 97, at 562.
313. See John Cirace, An Economic Analysis of the "State-Municipal Action" Antitrust Cases, 61 Tex. L. Rev. 481, 498 (1982) (arguing that antitrust immunity should be limited to "scope of the substantial market failure" at which state action displacing competition is directed);
314. Matthew L. Spitzer, Antitrust Federalism and Rational Choice Political Economy: A Critique of Capture Theory, 61 S. Cal. L. Rev. 1293, 1318-21 (1988) (proposing economic efficiency as criterion for determining whether state or local regulation supplants antitrust laws).
315. The leading article is John Shepard Wiley, Jr., A Capture Theory of Antitrust Federalism, 99 Harv. L. Rev. 713, 764-73 (1986).
316. For other prominent proposals, see Frank H. Easterbrook, Antitrust and the Economics of Federalism, 26 J.L. & Econ. 23, 45-46 (1983) (advocating revising state action immunity so as to promote regulatory competition among states when each state bears entire cost of its enacted regulatory scheme);
317. Einer Richard Elhauge, The Scope of Antitrust Process, 104 Harv. L. Rev. 667, 696-729 (1991) (proposing that state action immunity be granted only to policies established by financially disinterested and politically accountable decisionmakers and rejecting capture theory as failing to articulate coherent analytical framework, inconsistent with existing doctrine, and impossible to administer);
318. Robert P. Inman & Daniel L. Rubinfeld, Making Sense of the Antitrust State-Action Doctrine: Balancing Political Participation and Economic Efficiency in Regulatory Federalism, 75 Tex. L. Rev. 1203, 1250-71 (1997) (characterizing state action doctrine as process oriented and focusing upon promoting political participation at state level);
319. Richard Squire, Antitrust and the Supremacy Clause, 59 Stan. L. Rev. 77, 111-23 (2006) (arguing in favor of allowing state and local governments to regulate in such fashion as to benefit interest groups only if interests of third parties are taken into account, generally through direct government management of market).
320. See Hovenkamp, supra note 4, § 20.2(b), at 740-41.
321. 504 U.S. 621, 634 (1992).
322. Id. at 634-35.
323. Id. at 635.
324. Herbert Hovenkamp, Antitrust and the Regulatory Enterprise, 2004 Colum. Bus. L. Rev. 335, 352.
325. See, e.g., Steven C Salop, Exclusionary Conduct, Effect on Consumers, and the Flawed Profit-Sacrifice Standard, 73 Antitrust L.J. 311, 372 n.224 (2006) ("[Trinko] suggested . . . that the [essential facilities] doctrine would be relevant only when access to the facility is not regulated.").
326. See Linkline Commc'ns, Inc. v. SBC Cal., Inc., No. 05-56023, 2007 WL 2597258, at *4-*7 (9th Cir. Sept. 11, 2007) (holding that Trinko foreclosed refusal to deal and essential facilities claims, but did not foreclose price squeeze claims); Covad Commc'ns Co. v. BellSouth Corp., 374 F.3d 1044, 1049-50 (11th Cir. 2004) (same); Z-Tel Commc'ns, Inc. v. SBC Commc'ns, Inc., 331 F. Supp. 2d 513, 535-43 (E.D. Tex. 2004) (holding that Trinko foreclosed essential facility claim, but did not foreclose claims based on Aspen Skiing and monopoly leveraging); cf. Covad Commc'ns Co. v. Bell Ad. Corp., 398 F.3d 666, 670, 672-76 (D.C Cir. 2005) (upholding dismissal of essential facilities claims, but reversing dismissal of predation claims).
327. See 47 U.S.C. § 252(a)(1) (2000).
328. Id. § 252(b)(1).
329. See supra notes 147-155 and accompanying text.
330. See Yoo, Network Neutrality and Congestion, supra note 109, at 1855-60 (providing overview of network neutrality debate).
331. See Inquiry Concerning High-Speed Access to the Internet over Cable and Other Facilities, Declaratory Ruling and Notice of Proposed Rulemaking, 17 F.C.C.R. 4798, 4820-41 ¶¶ 34-74, 4843-48 ¶¶ 83-95 (2002).
332. See Christopher S. Yoo, Would Mandating Broadband Network Neutrality Help or Hurt Competition? A Comment on the End-to-End Debate, 3 J. on Telecomm. & High Tech. L. 23, 40-41 (2004).
333. See Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 996 (2005).
334. See Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, Report and Order and Notice of Proposed Rulemaking, 20 F.C.C.R. 14853, 14856 ¶ 2 (2005) [hereinafter Wireline Broadband Access Order].
335. Id. at 14862-65 ¶¶ 12-17, 14904 ¶ 96.
336. See Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, Policy Statement, 20 F.C.C.R. 14986, 14987-88 ¶ 4 (2005). These principles were subject to certain exceptions, such as the needs of law enforcement and "reasonable network management." Id. at 14987-88 ¶ 4 & n.15.
337. Wireline Broadband Access Order, supra note 275, at 14904 ¶ 96.
338. See Madison River Communications, LLC, Order, 20 F.C.C.R. 4295, 4295 (2005). Because the action against Madison River preceded its order ruling that DSL was an information service governed by Title I, the consent decree reserved the right to entertain future complaints under its Title II authority. Id. at 4298.
339. See AT&T Inc. and BellSouth Corp. Application for Transfer of Control, Memorandum Opinion and Order, 22 F.C.C.R. 5662, 5724-27 ¶¶ 116-120, 5738-39 ¶¶ 151-153 (2007) [hereinafter AT&T-BellSouth Order] (concluding that "the strong and increasing competition for mass market high-speed Internet access services will limit the incentives and ability of the merged entity to discriminate" and noting lack of record evidence of discrimination against any "content, service[], or application[]" provider); Applications for Consent to the Assignment and/or Transfer of Control of Licenses, Adelphia Communications Corp., Assignors, to Time Warner Cable Inc., Assignees, et al., Memorandum Opinion and Order, 21 F.C.C.R. 8203, 8296-99 ¶¶ 217-223 (2006) (concluding that competition among broadband providers was sufficiently "vigorous" to protect against exclusion of Internet content, services, or applications and noting absence of evidence that access providers "willfully blocked a web page or other Internet content, service, or application" outside of context of spam prevention); Verizon Communications, Inc. and MCI, Inc. Applications for Approval of Transfer of Control, Memorandum Opinion and Order, 20 F.C.C.R. 18433, 18507-09 ¶¶ 139-142 (2005) [hereinafter Verizon-MCI Order] (arguing that customers' ability to switch access providers reduces incentive to discriminate and that network architecture renders discrimination difficult, if not impossible); SBC Communications, Inc. and AT&T Corp. Applications for Approval of Transfer of Control, Memorandum Opinion and Order, 20 F.C.C.R. 18290, 18366-68 ¶¶ 140-143 (2005) [hereinafter SBC-AT&T Order] (same).
340. See AT&T-BellSouth Order, supra note 280, at 5726 n.339 (noting AT&T's voluntary commitment to uphold network neutrality principles); Verizon-MCI Order, supra note 280, 18,509 ¶ 143 (noting similar commitments by Verizon and MCI); SBC AT&T Order, supra note 280, at 18,368 ¶ 144 (noting similar commitment by SBC).
341. See Broadband Industry Practices, Notice of Inquiry, 22 F.C.C.R. 7894, 7896-98 ¶¶ 8-11 (2007).
342. See supra notes 254-256 and accompanying text.
343. See Jonathan L. Rubin, The Truth About Trinko, 50 Antitrust Bull. 725, 740-41 (2005) (noting potential limitations of Trinko arising from its reliance upon particular regulatory scheme).
344. See supra notes 262-265 and accompanying text.
345. See supra notes 257-261 and accompanying text.
346. Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 410 (2004) ("The unbundled elements . . . are . . . offered not to consumers but to rivals . . . .").
347. Id.
348. Id.
349. Id. at 414.
350. For our initial discussion of these principles, see Daniel F. Spulber & Christopher S. Yoo, On the Regulation of Networks as Complex Systems: A Graph Theory Approach, 99 Nw. U. L. Rev. 1687, 1693-1707 (2005) [hereinafter Spulber & Yoo, Regulation of Networks].
351. For a network of n nodes, a spanning tree would consist of n - 1 links.
352. n-2, where n is greater than or equal to two. See Arthur Cayley, A Theorem on Trees, 23 Q.J. Pure & Applied Mathematics 376, 376 (1889). Thus for ten nodes, there are 100 million possible different spanning trees.
353. See, e.g., R.C. Prim, Shortest Connection Networks and Some Generalizations, 36 Bell Sys. Tech. J. 1389, 1398-400 (1957) (describing one such algorithm).
354. See Spulber & Yoo, Regulation of Networks, supra note 291, at 1701-03.
355. See id. at 1699-701.
356. See id. at 1698-99, 1709.
357. See id. at 1717.
358. See Coase, supra note 78, at 394-98.
359. See Daniel F. Spulber & Christopher S. Yoo, Network Regulation: The Many Faces of Access, 1 J. Competition L. & Econ. 635, 638-39 (2005) [hereinafter Spulber & Yoo, Network Regulation].
360. For a more detailed analysis of the impact of retail access, see id. at 639-40, 647-50, 661-62.
361. See id. at 639-40.
362. See Jim Rossi, The Common Law "Duty to Serve" and Protection of Consumers in an Age of Competitive Retail Public Utility Restructuring, 51 Vand. L. Rev. 1233, 1271-73 (1998) (discussing price regulation of public utility monopolies).
363. See Spulber & Yoo, Network Regulation, supra note 300, at 647-50.
364. See J. Gregory Sidak & Daniel F. Spulber, Deregulatory Takings and the Regulatory Contract 119-27 (1997).
365. For an overview of price discrimination, see generally Hal R. Varian, Price Discrimination, in 1 Handbook of Industrial Organization, supra note 76, at 597.
366. See F.P. Ramsey, A Contribution to the Theory of Taxation, 37 Econ. J. 47, 58-59 (1927) (arguing that price should be allocated between products in inverse relation to elasticity of demand).
367. See Yoo, Network Neutrality and Congestion, supra note 109, at 1901-03.
368. See supra note 13 and accompanying text. This is true regardless of whether the natural monopoly arises because of declining average costs or network economic effects. See Mark A. Lemley & David McGowan, Legal Implications of Network Economic Effects, 86 Cal. L. Rev. 479, 503 (1998) ("Courts cannot normally 'undo' network effects with the tools of antitrust. Network effects are an inherent part of certain markets, not a 'market failure' for which the law must necessarily correct").
369. Union Leader Corp. v. Newspapers of New England, Inc., 284 F.2d 582, 584 (1st Cir. 1960).
370. Omega Satellite Prods. Co. v. City of Indianapolis, 694 F.2d 119, 126 (7th Cir. 1982); see also Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 548 (9th Cir. 1991) ("The Sherman Act . . . has not been interpreted to penalize natural monopolies."); Hecht v. Pro-Football, Inc., 570 F.2d 982, 990-91 (D.C. Cir. 1977) (noting that particular characteristics of natural monopoly make it unsuitable for application of antitrust laws absent predatory conduct); Greenville Publ'g Co. v. Daily Reflector, Inc., 496 F.2d 391, 397 (4th Cir. 1974) ("The characteristics of a natural monopoly make it inappropriate to apply the usual rule that success in driving competitors from the market is evidence of illegal monopolization."); Lamb Enters., Inc. v. Toledo Blade Co., 461 F.2d 506, 515 (6th Cir. 1972) ("In a natural monopoly situation any successful competitor gets the market. Thus, it cannot be unreasonable, per se, to foreclose competitors from any substantial market where such foreclosure is the natural result of success in a natural monopoly situation." (citation and internal quotation marks omitted)); Am. Football League v. Nat'l Football League, 323 F.2d 124, 131 (4th Cir. 1963) ("When one has acquired a natural monopoly by means which are neither exclusionary, unfair, nor predatory, he is not disempowered to defend his position fairly."); 3 Areeda & Hovenkamp, supra note 4, ¶ 658(b), at 121 (defining and explaining natural monopoly).
371. See 3A Areeda & Hovenkamp, supra note 4, ¶ 771(b), at 171-72 (emphasizing that purpose of antitrust is to prevent and eliminate monopolies in order to improve overall welfare and noting that mere forced sharing of monopoly input fails to improve consumer welfare and decreases dynamic efficiency); James B. Speta, Resale Requirements and the Intersection of Antitrust and Regulated Industries, 31 J. Corp. L. 307, 319-21 (2006) (arguing that retail access requirements cannot be justified by standard purposes of antitrust).
372. Yoo, Beyond Network Neutrality, supra note 71, at 56 (internal quotation marks omitted).
373. See 94 U.S. 113, 126 (1876).
374. 291 U.S. 502, 536 (1934).
375. Id.; see also Jackson v. Metro. Edison Co., 419 U.S. 345, 353 (1974) (applying same reasoning in context of public utility's refusal to serve customer).
376. See Yoo, Beyond Network Neutrality, supra note 71, at 56 (noting general abandonment of concept following Nebbia).
377. For a more detailed analysis of the impact of wholesale access, see Spulber & Yoo, Network Regulation, supra note 300, at 640-41, 650-56, 662-69.
378. See id. at 651-52.
379. See supra notes 306-308 and accompanying text.
380. See Spulber & Yoo, Network Regulation, supra note 300, at 662-69.
381. See id. at 666-67.
382. Hovenkamp, supra note 4, § 11.6(e), at 490.
383. Id.
384. Id.
385. See supra note 36 and accompanying text.
386. 3A Areeda & Hovenkamp, supra note 4, ¶ 787(c)(1), at 306.
387. See id. at 304-05.
388. See supra notes 31-33 and accompanying text.
389. See 3A Areeda & Hovenkamp, supra note 4, ¶ 787(c), at 306 (arguing that "[r]educed to essentials," Otter Tail-type fact patterns amount to "the plaintiff's claim of the right to distribute the defendant's product, charging an intermediate markup").
390. See supra notes 35-39 and accompanying text.
391. Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 410 (2004) (citing Otter Tail Power Co. v. United States, 410 U.S. 366, 370-71, 377-78 (1973)).
392. See Z-Tel Commc'ns, Inc. v. SBC Commc'ns, Inc., 331 F. Supp. 2d 513, 536-39 (E.D. Tex. 2004) (claiming that Trinko, through discussion of Otter Tail, required nondiscriminatory provision of wholesale services).
393. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 593 (1985) (noting Ski Co.'s refusal to sell Highlands lift tickets at "tour operator's discount or at retail").
394. Trinko, 540 U.S. at 409.
395. See Paul Milgrom & John Roberts, Economics, Organization and Management 79-83 (1992) ("[A]dopting the outside market price as the transfer price both directs divisional quantity decisions to maximize corporate profits and provides the right signals regarding performance and investment").
396. See MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124, 1132-34 (9th Cir. 2004) (holding Aspen Skiing inapplicable when network owner is willing to sell at full retail price, even when retail price is discriminatory).
397. See St. Louis, Iron Mountain & S. Ry. Co. v. S. Express Co. (Express Cases), 117 U.S. 1, 26-29 (1886) (declining to impose duty upon railroads to grant access to competitors); Pac. Tel. & Tel. Co. v. Anderson, 196 F. 699, 703 (E.D. Wash. 1912) (acknowledging telephone companies' duty to serve consumers, but declining to extend obligation to wholesale access for competitors); Huber et al., supra note 89, § 1.3.1, at 13-16, § 5.1.1, at 406-08 (tracing history in which courts declined to require telephone companies to deal with competitors).
398. See FTC v. Brown Shoe Co., 384 U.S. 316, 320-21 (1966) (rejecting exclusive dealing arrangement involving small fraction of retailers); Standard Oil Co. v. United States (Standard Stations), 337 U.S. 293, 314 (1948) (striking down exclusive dealing contract that foreclosed 16% of market); Eastman Kodak Co. v. S. Photo Materials Co., 273 U.S. 359, 375 (1927) (invalidating exclusive dealing contract despite absence of direct evidence of purpose to monopolize).
399. Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 54-55 (1977) (citation and footnote omitted).
400. See, e.g., Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723-25 (1988) (quoting above language from Sylvania with approval); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 762-63 (1984) (recognizing legitimacy of using vertical restraints to limit free riding). For a discussion of other cases approving a manufacturers' shift to an exclusivity arrangement, see Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 454-55 (1993).
401. See State Oil Co. v. Khan, 522 U.S. 3, 16 (1997) (claiming that limitations upon vertical restraints have driven manufacturers to vertically integrate); Bus. Elecs., 485 U.S. at 725 (arguing that imposing limitations upon vertical restraints will provide "perverse incentive for manufacturers to integrate vertically"); Sylvania, 433 U.S. at 57 n.26 ("To the extent that a per se rule prevents a firm from using the franchise system to achieve efficiencies . . . important to its successful operation, the rule creates an incentive for vertical integration into the distribution system, thereby eliminating to that extent the role of independent businessmen."); Standard Stations, 337 U.S. at 309-12 (arguing that invalidation of moderate vertical restraint may bring about more serious anticompetitive behavior); Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373, 411 (1911) (Holmes, J., dissenting) (noting that manufacturer can avoid rule against vertical price restraints by integrating vertically), overruled by Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007).
402. For a more detailed analysis of the impact of interconnection access, see Spulber & Yoo, Network Regulation, supra note 300, at 641-42, 656-57, 669-70.
403. See Spulber & Yoo, Regulation of Networks, supra note 291, at 1696 (noting that network consisting of n nodes has (1/2)n(n - 1) possible links).
404. See Spulber & Yoo, Network Regulation, supra note 300, at 656-57.
405. See id. at 669-70.
406. For an overview of the associated literature, see Daniel F. Spulber & Christopher S. Yoo, Access to Networks: Economic and Constitutional Connections, 88 Cornell L. Rev. 885, 921-33 (2003) [hereinafter Spulber & Yoo, Access to Networks].
407. See Nicholas Economides et al., Regulatory Pricing Rules to Neutralize Network Dominance, 5 Indus. & Corp. Change 1013, 1014 (1996) (discussing incumbent carriers' incentive to refuse to interconnect);
408. Gerald R. Faulhaber, Bottlenecks and Bandwagons: Access Policy in the New Telecommunications, in 2 Handbook of Telecommunications Economics 487, 502-03 (Sumit K. Majumdar et al. eds., 2005) [hereinafter Faulhaber, Bottlenecks and Bandwagons] (describing how dominant firm can use refusal to interconnect to harm competition);
409. Eli M. Noam, Will Universal Service and Common Carriage Survive the Telecommunications Act of 1996?, 97 Colum. L. Rev. 955, 973-74 (1997) (discussing means by which firms can use refusals to interconnect to harm competition when markets are not competitive); Shelanski, supra note 253, at 99-100 (arguing that incumbents with asymmetric market share have little incentive to interconnect);
410. James B. Speta, A Common Carrier Approach to Internet Interconnection, 54 Fed. Comm. L.J. 225, 268-79 (2002) (arguing in favor of interconnection requirement for Internet carriers);
411. Kevin Werbach, Only Connect, 22 Berkeley Tech. L.J. (forthcoming 2007) (manuscript at 9, on file with the Columbia Law Review) (arguing in favor of mandating interconnection).
412. See Stanley M. Besen & Joseph Farrell, Choosing How to Compete: Strategies and Tactics in Standardization, J. Econ. Persp., Spring 1994, at 117, 119-21 (discussing choice between competing to become dominant standard and voluntary cooperation with competitors). For an application to broadband, see generally Woroch, supra note 91.
413. See Michael L. Katz & Carl Shapiro, Systems Competition and Network Effects, J. Econ. Persp., Spring 1994, at 93, 105 [hereinafter Katz & Shapiro, Systems Competition] (noting that "[i]n markets with network effects, there is natural tendency toward de facto standardization").
414. See Faulhaber, Bottlenecks and Bandwagons, supra note 348, at 501-02;
415. see also Nicholas Economides, The Economics of the Internet Backbone, in 2 Handbook of Telecommunications Economics, supra note 348, at 373, 390 (recognizing that network economic effects give firms strong incentives to interconnect);
416. Michael L. Katz & Carl Shapiro, Network Externalities, Competition, and Compatibility, 75 Am. Econ. Rev. 424, 429 (1985) (noting that "[a]s the number of firms becomes increasingly large," equilibrium in which all firms interconnect converges to perfecdy competitive equilibrium). The theoretical literature does suggest that a network providing service under a caller-pays regime may nonetheless be able to use its control over interconnection to harm competition even though it faces competition. When the calling party pays, the originating network must compensate the terminating network through some form of access charge. In essence, originating networks make contributions to a common pool that is used to compensate terminating networks. Terminating networks that are free to negotiate their own access charge arrangements have the incentive to free ride on the contributions of others by withdrawing a disproportionate amount from the common pool. This problem need not be solved by mandating interconnection access. It can also be solved through a system of reciprocity, or any form of uniform access charges, including benchmarking and central office bill and keep.
417. For a more complete discussion, see Yoo, What Can Antitrust Contribute, supra note 62, at 519-21.
418. See Michael L. Katz & Carl Shapiro, Product Introduction with Network Externalities, 40 J. Indus. Econ. 55, 67, 73 (1992) (showing that exponential market growth renders lock-in impossible);
419. S.J. Liebowitz & Stephen E. Margolis, Should Technology Choice Be a Concern of Antitrust Policy?, 9 Harv. J.L. & Tech. 283, 312 (1996) (noting that markets can overcome lock-in "[i]f a market is growing rapidly" and thus "the number of users who have made commitments to any standard is small relative to the number of future users");
420. Carl Shapiro, Aftermarkets and Consumer Welfare: Making Sense of Kodak, 63 Antitrust L.J. 483, 490 (1995) ("A manufacturer will find installed-base opportunism less attractive, the greater is the growth rate of the market . . . .");
421. cf. Joseph Kattan, Market Power in the Presence of an Installed Base, 62 Antitrust L.J. 1, 8, 11 (1993) (noting that lock-in is most likely when "the installed base is large relative to the population of 'new' buyers" and that ability to exercise market power depends upon "ratio of 'locked-in' customers to 'new' purchasers").
422. See Besen & Farrell, supra note 349, at 119-29 (examining interconnection payoffs in duopoly model); Jacques Crémer, Patrick Rey & Jean Tirole, Connectivity in the Commercial Internet, 48 J. Indus. Econ. 433, 448-53 (2000) (same);
423. Michael L. Katz & Carl Shapiro, Technology Adoption in the Presence of Network Externalities, 94 J. Pol. Econ. 822, 824 (1986) (examining "industry evolution in a market with technological change where there are two inherently incompatible technologies").
424. See Spulber & Yoo, Access to Networks, supra note 347, at 928-29.
425. See Woroch, supra note 91, at 722-23, 733-41.
426. Interconnection & Resale Obligations Pertaining to Commercial Mobile Radio Servs., Fourth Report and Order, 15 F.C.C.R. 13523, 13534 ¶ 28 (2000).
427. Verizon-MCI Order, supra note 280, at 18496 ¶ 118; SBC-AT&T Order, supra note 280, at 18354 ¶ 117; accord Michael Kende, The Digital Handshake: Connecting Internet Backbones 18-22, 31-32 (FCC Office of Plans & Pol'y, Working Paper No. 32, Sept. 2000), available at http://www.fcc.gov/ Bureaus/OPP/working_papers/oppwp32.pdf (on file with the Columbia Law Review) (arguing that larger market participants have incentive to offer interconnection services to smaller competitors for fee, if not to interconnect as peers).
428. See AT&T-BellSouth Order, supra note 280, at 5731 ¶ 129, 5734-36 ¶¶ 140-144.
429. See Application of WorldCom, Inc. and MCI Communications Corp. for Transfer of Control of MCI Communications Corp. to WorldCom, Inc., Memorandum Opinion and Order, 13 F.C.C.R. 18025, 18108-11 ¶¶ 150-151 (1998).
430. Id. at 18115 ¶ 155.
431. See Besen & Farrell, supra note 349, at 122-24 (analyzing ways in which competition between two incompatible networks might unfold).
432. See id. at 119-20, 122-24 (noting how competition between incompatible networks can accelerate as well as delay market growth, may dissipate any supracompetitive returns, and may lead to penetration pricing and long-term commitments to lower prices).
433. See Robert Bornholz & David S. Evans, The Early History of Competition in the Telephone Industry, in Breaking Up Bell: Essays on Industrial Organization and Regulation 7, 13 (David S. Evans ed., 1983);
434. see also Richard Gabel, The Early Competitive Era in Telephone Communications, 1893-1920, 34 Law & Contemp. Probs. 340, 344 (1969) (reporting 3.0 million independent lines in 1907, compared with 3.1 million Bell lines).
435. See Gerald W. Brock, The Telecommunications Industry 177 (1981).
436. See, e.g., Mark A. Lemley, Antitrust and the Internet Standardization Problem, 28 Conn. L. Rev. 1041, 1046 n.19 (1996) (arguing that refusal to interconnect allowed AT&T to reassert dominance after telephone service became competitive in 1890s);
437. Shelanski & Sidak, supra note 203, at 8 ("The history of local telephone service in the first decades of the twentieth century, during which AT&T refused to connect with independent competitors, illustrates how [network economic effects] can lead to monopoly.").
438. See Roger G. Noll & Bruce M. Owen, The Anticompetitive Uses of Regulation: United States v. AT&T, in The Antitrust Revolution 290, 292 (John E. Kwoka, Jr. & Lawrence J. White eds., 1989). Noll and Owen suggest that it was the Bell System's control of certain long distance patents that allowed it to reassert its dominance. See id. at 292; see also Brock, supra note 364, at 117-19 (arguing that AT&T's eventual success in developing long distance technology provided competitive advantage over geographically isolated rivals); Gerald R. Faulhaber, Telecommunications in Turmoil 3-5 (1987) [hereinafter Faulhaber, Telecommunications in Turmoil] (arguing that AT&T's control of superior long distance technology made assets of independent providers more valuable to AT&T than to other entities, bringing about eventual sale to AT&T's John V. Langdale, The Growth of Long-Distance Telephony in the Bell System: 1875-1907, 4 J. Hist. Geography 145, 155 (1978) (arguing that AT&T's technological advantage in long distance market, reinforced by network effects, created corresponding advantage in local markets). The argument that superior long distance service could provide a key competitive advantage is belied by the fact that interstate calls constituted
439. See Mueller, supra note 366, at 10, 51, 78-79, 115-17, 121-22 (describing independent opposition to interconnection); Bornholz & Evans, supra note 363, at 25-27 (same); Gabel, supra note 363, at 353-54 (same).
440. See Mueller, supra note 366, at 55-60 (describing independent telephone companies' initial acquisition of dominant market shares in rural areas, small cities, and suburban areas).
441. See id. at 76-80, 107-10 (describing AT&T's success in regaining dominant position through liberalization of interconnection with key independent phone companies); David F. Weiman & Richard C. Levin, Preying for Monopoly? The Case of Southern Bell Telephone Company, 1894-1912, 102 J. Pol. Econ. 103, 115, 118 (1994) (describing Southern Bell's use of interconnection with select independent phone companies to regain dominant position).
442. See Mueller, supra note 366, at 39-42, 55-60, 70-71, 74-75 (describing AT&T's attempts to provide service to rural and residential areas and small cities it initially neglected, as well as independent telephone companies' extensive development of such markets); Gabel, supra note 363, at 344-45 (describing "vigorous pursuit of new markets" by both AT&T and independents between 1895 and 1907).
443. Weiman & Levin, supra note 369, at 118 (internal quotation marks omitted); see also Mueller, supra note 366, at 78, 107-13 (describing AT&T's practice of interconnecting with key independent local telephone companies).
444. See Noam, supra note 348, at 973.
445. See Mueller, supra note 366, at 99-100, 127-28 (describing AT&T's 1907 embrace of both local and national regulation as justification for permitting reestablishment of monopoly); Gabel, supra note 363, at 355-58 (same); Weiman & Levin, supra note 369, at 120-25 (same).
446. See Gabel, supra note 363, at 355-58.
447. See Letter from Nathan C. Kingsbury, Vice President, AT&T Co., to Attorney General J.C. McReynolds (Dec. 19, 1913), in AT&T Co., 1913 Annual Report 24, 24-26 (1914) [hereinafter Kingsbury Commitment];
448. see also Faulhaber, Telecommunications in Turmoil, supra note 366, at 6, 18 n.6 (discussing resolution of government suit and involvement of Kingsbury therein).
449. See Kingsbury Commitment, supra note 375, at 24.
450. See id. at 25.
451. See United States v. AT&T Co., No. 6082 (D. Or. Sept. 7, 1914) (order modifying decree) (authorizing AT&T's acquisition of competing local telephone company in Spokane), reprinted in Decrees and Judgments in Federal Anti-Trust Cases, July 2, 1890-January 1, 1918, at 497 (Roger Shale ed., 1918).
452. See Mueller, supra note 366, at 133-34.
453. See Gabel, supra note 363, at 353.
454. See Ch. 20, 42 Stat. 27 (1921).
455. See Bureau of Statsitics, Interstate Commerce Comm'n, Interstate Commerce Commission Activities, 1887-1937, at 201 (1937) (reporting that out of 288 merger applications, "281 were approved, 4 were withdrawn, and 3 denied");
456. Glen O. Robinson, The Federal Communications Act: An Essay on Origins and Regulatory Purpose, in A Legislative History of the Communications Act of 1934, at 3, 8 n.25 (Max D. Paglin ed., 1989) (noting AT&T submission reporting ICC approval of 272 out of 275 proposed mergers).
457. Mueller, supra note 366, at 99-100 (describing AT&T's newfound commitment to government regulation); Gabel, supra note 363, at 357 (noting AT&T's "promotion of regulatory authority in utility commissions" and provision of "legislative consultants to 'help and advise' state . . . legislators"); Robinson, supra note 382, at 6-7 (noting support for regulation as means for avoiding "vigorous competition" among both AT&T and independent telephone companies).
458. 47 U.S.C. § 157 note (2000).
459. See Mueller, supra note 366, at 25.
460. See Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414-15 (2004).
461. See Faulhaber, Bottlenecks and Bandwagons, supra note 348, at 506-08.
462. See Yoo, Beyond Network Neutrality, supra note 71, at 27-37 (arguing that network differentiation allows smaller service providers certain competitive advantages).
463. See id. at 58-60.
464. See MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1132-33 (7th Cir. 1983).
465. See id. at 1147.
466. Id. at 1148.
467. See MCI Telecomms. Corp. v. FCC, 580 F.2d 590, 594-99 (D.C. Cir. 1978); MCI Telecomms. Corp. v. FCC, 561 F.2d 365, 378-79 (D.C. Cir. 1977).
468. See United States v. AT&T Co. (Modification of Final Judgment), 552 F. Supp. 131, 195-200 (D.D.C. 1982) (noting that operating companies will be required to provide third parties with services equivalent to those provided to AT&T and its affiliates), aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983).
469. See supra notes 40-43 and accompanying text.
470. See supra notes 46-50 and accompanying text.
471. Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 409 (2004).
472. See id. (contrasting Ski Co.'s prior willingness to conduct business at retail price with Verizon's reluctance ever to do so).
473. For a more detailed analysis of the impact of platform access, see Spulber & Yoo, Network Regulation, supra note 300, at 643-45, 657-58, 670-71.
474. See Yoo, Network Neutrality and Congestion, supra note 109, at 1896 (discussing regulatory requirements necessary for network neutrality).
475. The classic example is, of course, the government's 1974 case that led to the breakup of AT&T. See United States v. AT&T Co. (Modification of Final Judgment), 552 F. Supp. 131, 195-97 (D.D.C. 1982), aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983). For other examples, see the cases cited in supra notes 151, 160-161, and 178.
476. See Yoo, Network Neutrality and Congestion, supra note 109, at 1850-51.
477. As Joseph Farrell and Philip Weiser note, "the platform monopolist has an incentive to be a good steward of the applications sector for its platform." Farrell & Weiser, supra note 86, at 104; see also Besen & Farrell, supra note 349, at 117 ("A firm's strategy toward vertically related firms - the suppliers of complementary goods-normally involves trying to encourage a generous supply of complements, while perhaps also trying to discourage the supply of complements to rivals.").
478. Katz & Shapiro, Systems Competition, supra note 350, at 110; accord Joseph Farrell & Garth Saloner, Standardization, Compatibility, and Innovation, 16 RAND J. Econ. 70, 71 (1985) (counting "reduction in variety" as among "important social costs" of standardization); Katz & Shapiro, Systems Competition, supra note 350, at 110 (noting that "the primary cost of standardization is a loss of variety: consumers have fewer differentiated products to pick from").
479. See Katz & Shapiro, Systems Competition, supra note 350, at 106 (noting that "market equilibrium with multiple incompatible products reflects the social value of variety"); Liebowitz & Margolis, supra note 352, at 292 ("Where there are differences in preferences regarding alternative standards, coexistence of standards is a likely outcome.").
480. See Yoo, Beyond Network Neutrality, supra note 71, at 21.
481. See id. at 21-22.
482. See Edward Hastings Chamberlin, The Theory of Monopolistic Competition: A Reorientation of the Theory of Value 97-100 (8th ed. 1962).
483. See Yoo, Beyond Network Neutrality, supra note 71, at 29-33.
484. See Gerald R. Faulhaber, Policy-Induced Competition: The Telecommunications Experiments, 15 Info. Econ. & Pol'y 73, 82-84 (2003).
485. See id. at 77, 81.
486. See Yoo, Beyond Network Neutrality, supra note 71, at 43-45 (noting how access requirements can stifle competition and innovation in technologically dynamic industries by locking interfaces into place).
487. See supra notes 244-252 and accompanying text.
488. See supra note 377 and accompanying text.
489. See Mueller, supra note 366, at 131-32 (describing large surcharges, exclusive control arrangements, and use restrictions implemented by AT&T following Kingsbury Commitment).
490. See supra notes 94-98 and accompanying text.
491. See supra note 102 and accompanying text.
492. See Spulber & Yoo, Access to Networks, supra note 347, at 975-76.
493. See Yoo, Network Neutrality and Congestion, supra note 109, at 1894-95.
494. See MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1132-33 (7th Cir. 1983) (requiring AT&T to provide MCI with platform access to local telephone networks for use in developing competitive long distance telephone service); United States v. AT&T Co. (Modification of Final Judgment), 552 F. Supp. 131, 195-97 (D.D.C. 1982) (requiring AT&T to provide nondiscriminatory platform access to all long distance providers), aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983).
495. See Modification of Final Judgment, 552 F. Supp. at 195-97.
496. See Michael K. Kellogg et al., Federal Telecommunications Law § 5.3.2, at 259-63 (1992).
497. See United States v. GTE Corp., 603 F. Supp. 730, 743-44 (D.D.C. 1984).
498. See Huber et al., supra note 89, § 4.4.5, at 385.
499. See Modification of Final Judgment, 552 F. Supp. at 227; see also United States v. W. Elec. Co., 673 F. Supp. 525, 529 (D.D.C. 1987) (referring to line of business restrictions as Modification of Final Judgment's "core restrictions"), aff'd in part, rev'd in part, 900 F.2d 283 (D.C. Cir. 1990). The court imposed these line of business restrictions notwithstanding the objections of the FCC. See Huber et al., supra note 89, § 9.6.1, at 816.
500. Modification of Final Judgment, 552 F. Supp. at 228.
501. See supra notes 86-90 and accompanying text.
502. See supra notes 91-93 and accompanying text.
503. See United States v. W. Elec. Co., 993 F.2d 1572, 1578-80 (D.C. Cir. 1993).
504. See W. Elec. Co., 673 F. Supp. at 599.
505. See Huber et al., supra note 89, § 9.6.12, at 823-30.
506. Reed E. Hundt, Chairman, Fed. Commc'ns Comm'n, Thinking About Why Some Communications Mergers Are Unthinkable, Address Before the Brookings Institution (June 19, 1997), available at http://www.fcc.gov/Speeches/Hundt/spreh735.html (on file with the Columbia Law Review).
507. See Verizon-MCI Order, supra note 280, at 18510-12 ¶¶ 145-152; SBC-AT&T Order, supra note 280, at 18368-71 ¶¶ 146-152.
508. See United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007).
509. See Kellogg et al., supra note 422, §§ 5.3-5.4, at 253-73.
510. See id. § 7.1, at 52 (Supp. 1995).
511. See Paul H. Rubin & Hashem Dezhbakhsh, Costs of Delay and Rent-Seeking Under the Modification of Final Judgment, 16 Managerial & Decision Econ. 385, 385-88, 397 (1995).
512. See Yoo, What Can Antitrust Contribute, supra note 62, at 511-17, 525-29 (exploring implications of antitrust for network neutrality).
513. See FTC, Public Workshop on Broadband Connectivity Competition Policy, at http://www.ftc.gov/opp/workshops/broadband/ (last updated Aug. 29, 2007) (on file with the Columbia Law Review) (describing conference held Feb. 13-14, 2007, in Washington, D.C).
514. For a more detailed analysis of the impact of unbundled access, see Spulber & Yoo, Network Regulation, supra note 300, at 645-46, 658-60, 671-73.
515. See Spulber & Yoo, Regulation of Networks, supra note 291, at 1703-07.
516. See Huber et al., supra note 89, § 5.4.8, at 453-54.
517. See supra note 212 and accompanying text.
518. AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 428-29 (1999) (Breyer, J., concurring in part and dissenting in part); accord Verizon Commc'ns, Inc. v. FCC, 535 U.S. 467, 550-51 (2002) (Breyer, J., concurring in part and dissenting in part) (noting that compelling incumbents to share cost-reducing benefits of successful innovation destroys incumbents' incentives to innovate).
519. Iowa Utils. Bd., 525 U.S. at 428 (Breyer, J., concurring in part and dissenting in part).
520. Id. at 429 (citation omitted).
521. Id.
522. Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407-08 (2004).
523. Id. at 408.
524. Id. at 410.
525. Id. at 414.
526. Id. at 408.