US · won_by_defendant · ~9 min read
Pacific Bell v. linkLine (2009)
2003–2009 · DSL broadband, wholesale telecommunications
Independent internet providers resold AT&T's DSL lines. They sued, saying AT&T charged them high wholesale rates while undercutting them on retail DSL—squeezing their margins. The Supreme Court said that's not enough unless wholesale or retail pricing alone breaks antitrust law.
The story
After telecom opening, rivals could resell incumbent phone companies' DSL broadband to consumers. They depended on wholesale access to the incumbent's network.
linkLine accused AT&T (Pacific Bell) of a 'price squeeze': wholesale rates so high and retail DSL prices so low independents could not profit.
Lower courts split on whether a squeeze itself violates Sherman Act Section 2 without predatory retail pricing or illegal wholesale denial.
The Supreme Court, building on Trinko, said no standalone squeeze claim exists when there is no antitrust duty to provide wholesale access on favorable terms.
Plaintiffs must prove either predatory pricing at retail—below cost with recoupment—or an independent wholesale violation.
linkLine closed a path for mid-sized telecom rivals to attack integrated incumbents via margin arithmetic alone.
Broadband competition debates shifted toward net neutrality and later fiber/mobile platforms rather than DSL resale squeeze litigation.
Why it matters
Limits price squeeze monopolization theories in the US.
Pairs with Trinko on dominant firm leverage over rivals.
Wholesale-dependent businesses face higher proof burdens.
What was claimed
AT&T's dual pricing squeezed independent DSL rivals.
Competitive harm in broadband resale markets.
Margin squeeze should be unlawful monopolization.
The other side
AT&T cited Trinko and competitive retail pricing benefits.
Court said squeeze math is not standalone violation.
What it means for you
Independent ISPs need clear predatory pricing or refusal theories.
Integrated telecom/broadband firms gained defensive precedent.
Bottom line
linkLine killed the standalone price squeeze claim—rivals must point to concrete wholesale or retail violations, not just tight margins.
Timeline
2003
linkLine sues AT&T
Independent DSL provider claimed wholesale/retail pricing trapped it between high inputs and low retail.
2009
Price squeeze theory rejected
Court required separate wholesale or retail antitrust violation.
Key dates
- DSL resale competitors emerge
- Early 2000s
- Ninth Circuit allowed squeeze claim
- 2007
- Supreme Court reverses
- February 25, 2009
Formal snapshot
Summary: The Supreme Court rejected a 'price squeeze' claim against AT&T's wholesale and retail DSL pricing, holding plaintiffs must show either unlawful wholesale refusal or predatory retail pricing—not merely unfavorable margin between the two.
Regulator / plaintiff argument: Independent DSL retailers alleged AT&T set wholesale access prices so high and retail prices so low they could not compete—a margin squeeze without duty to deal.
Outcome: 2009 decision dismissed squeeze theory when no standalone wholesale or retail violation shown; companion to Trinko skepticism.
Remedies: N/A—doctrine limiting price squeeze claims.
Conduct tags
Laws referenced
- Sherman Act §2 — 15 U.S.C. §2
Companies
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