The Supreme Court’s Trinko decision has hamstrung the federal government’s ability to ensure competition in telecom, to the detriment of consumers and small businesses. Congress should either amend the Clayton Act to provide a right of action against anti-competitive activities in the communications industry or clarify what the antitrust savings clause was intended to accomplish.


Issue:

The U.S. Supreme Court raised the bar for private parties and government agencies to bring antitrust actions with its 2004 decision in Verizon Communications Inc v. Law Offices of Curtis V. Trinko, LLP (“Trinko”). In that case, the Court held that a failure to abide by the obligations of the Telecommunications Act of 1996 does not generate a separate cause of action under the antitrust laws (Section 2 of the Sherman Act).

The Trinko ruling runs counter to the express antitrust savings clause of the 1996 Telecom Act. The result of Trinko has been a substantial reduction in the use of our antitrust laws to guard against anti-competitive actions in the communications sector.

 

Background:

Anyone familiar with the FCC today understands that enormous gaps exist in the Commission’s ability to perform its statutory obligation to police the market. In the wake of Trinko, not only is the FCC hamstrung in its enforcement of rules and laws to safeguard competition, but now judges who may be reluctant to undertake complex antitrust cases involving the communications industry have an “out” by invoking the Trinko decision.

Not surprisingly, since the Trinko ruling the communications industry has seen substantial consolidation. The once-divested AT&T monopoly (one long-distance carrier and seven regional Bells) has been largely recreated through a series of acquisitions by two Bell Companies: SBC (now called AT&T) and Verizon. Add to wireline consolidation of national wireless assets, and one can readily see the market power that AT&T and Verizon now have relative to their competitors. These mergers and acquisitions were permitted by federal agencies that in theory are tasked with ensuring competition – but too often are toothless

Position:

The House Judiciary Committee has been wary of the potential impact of Trinko since the decision was handed down. Representatives Sensenbrenner and Conyers introduced the “Clarification of Antitrust Remedies in Telecommunications Act of 2004” to make it a violation of the Clayton Act for an incumbent to create or preserve a monopoly by using its network to engage in anticompetitive conduct. The bill also clarified that the mere existence of agency regulation would not affect the applicability of the legislation’s mandate.

While efforts to address the fallout from Trinko have not yet passed Congress, the stakes continue to rise with mega-mergers and industry consolidation. With no applicable antitrust laws – and an agency historically not focused on enforcement actions – consumers and small businesses are left vulnerable to anticompetitive forces, all while the pressure to enact restrictive regulations increases. Congress should eliminate the barrier raised due to the Trinko decision by either amending the Clayton Act to provide a right of action against anti-competitive activities in the communications industry, or by clarifying what the antitrust savings clause was intended to accomplish.