The Latest Word From the Supreme Court on When a Firm Must Deal With a Rival: Verizon Communicatio

Courts have wrestled with the law of monopolization ever since Congress passed the Sherman Act. Although Section 2 of the Sherman Act forbids monopolization and attempts to monopolize, courts have consistently held that monopolies themselves are not unlawful and that actions leading to monopoly are not necessarily illegal. Some courts and antitrust scholars have warned that overly broad application of Section 2 will deter beneficial business activity; they have wanted to ensure that the antitrust laws encouraged, but did not encumber, competition. Other courts and scholars have regarded monopolies with less deference and expressed the view that monopolies are to be disfavored because they generally cause more harm than good. A majority of the current Supreme Court appears to fall in the first camp, concerned that an expansive interpretation of Section 2 could be unduly regulatory and a deterrent to investment and innovation.

The philosophical divide over Section 2 has had a substantial impact on the debate over when the antitrust laws require a firm to do business with a competitor. As far back as 1919, the Supreme Court wrote in United States v. Colgate that, absent a purpose to create or maintain a monopoly, a firm can “exercise [its] own independent discretion as to parties” with which it will do business. The courts have found, nonetheless, that a monopolist can, under some circumstances, violate Section 2 by refusing to deal with a competitor. Defining those circumstances has been the nub of the debate in a number of monopolization cases.

For the full story, please view the PDF.