The Antitrust-Telecom Connection

Abstract

The Telecommunications Act of 1996 has spurred more than a dozen antitrust cases against local telephone companies alleging that by violating the Act the companies maintain their monopolies over local telephone service and thereby violate Section 2 of the Sherman Act. Existing antitrust-regulatory accommodation law has proven incapable of resolving whether antitrust claims can rest on violations of the Act. The circuits are divided, and each side appears incapable of comprehending the analytical analysis of the other. The divergent opinions can be explained by the courts' implicit reliance on two different lines of antitrust-regulatory accommodation doctrine. But neither strand of existing doctrine is appropriate in the telecom/antitrust cases, because existing doctrine was designed to accommodate antitrust with regulation that sought public policy goals other than competition. Where regulation seeks, like the antitrust laws, to enhance competition, a new approach is necessary. Courts have long been the primary makers of competition policy. The Telecom Act constitutes a rare instance of broad, direct legislative competition policy making. When Congress speaks so directly, courts need doctrine that takes account of that message. This article proposes a two-step approach that asks (1) whether applying the antitrust laws would interfere with the competition-enhancing regulatory regime, and (2) if not, how the regulation should affect antitrust analysis. Six possible degrees of connection between antitrust and competition-enhancing regulation emerge. And the degree appropriate to the telecom/antitrust cases would presume that violations of the Telecom Act have anticompetitive effect.