Court Supports Change of Suppliers

["Etchison, Michael" <etchison@puc.texas.gov>]

Court Supports Change of Suppliers

By LAURIE ASSEO Associated Press Writer

	WASHINGTON (AP) -- The Supreme Court today made it harder for companies 
to pursue some claims that other companies have unlawfully excluded them 
from the marketplace.
	Ruling unanimously in a case involving New York Telephone Co., the court 
said suppliers cannot claim they are the victim of a group boycott when a 
single buyer decides to switch to another supplier.
	``The freedom to switch suppliers lies close to the heart of the 
competitive process that the antitrust laws seek to encourage,'' Justice 
Stephen G. Breyer wrote for the court.
	The case involves a 1990 lawsuit against New York Telephone and its 
parent company, NYNEX, by Discon Inc., a company formerly used by New 
York Telephone to salvage and dispose of obsolete telephone equipment in 
central offices. NYNEX has since become a subsidiary of Bell Atlantic 
Corp.
	Discon's competitor in the equipment-removal business was AT&T 
Technologies.
	Discon's lawsuit said New York Telephone, through a purchasing 
subsidiary, sought to charge inflated prices for removal of telephone 
equipment.
	The lawsuit said New York Telephone unlawfully switched its business to 
AT&T Technologies and acted to exclude Discon from the market because it 
charged less than AT&T. Discon eventually ceased operations.
	A federal judge dismissed all of Discon's federal claims. The 2nd U.S. 
Circuit Court of Appeals reinstated part of the lawsuit, saying Discon 
could allege a group boycott even when the claimed actions involved a 
single buyer and a single supplier.
	A group boycott is presumed unlawful under federal antitrust law, 
without requiring proof of harm to the competitive process.
	The 2nd Circuit court also said Discon could pursue a claim of 
conspiracy to monopolize the market.
	The nation's highest court today conceded Discon's argument that NYNEX's 
actions harmed consumers by raising telephone service rates. But the 
justices ruled that the federal law does not allow group boycott claims 
when only a single buyer and single supplier are involved.
	Allowing such claims ``would transform cases involving business behavior 
that is improper for various reasons ... into treble-damages antitrust 
cases,'' Breyer wrote. He added that such a rule ``would discourage firms 
from changing suppliers -- even where the competitive process itself does 
not suffer harm.''
	The justices also ordered the 2nd Circuit court to reconsider whether 
Discon can pursue its separate claim of conspiracy to monopolize the 
market. That claim can go forward only if Discon can show the NYNEX 
agreements harmed the competitive process, the justices said.
	The case is NYNEX Corp. vs. Discon, 96-1570.

(PROFILE (CO:Bell Atlantic Corp; TS:BEL; IG:TLS;) (CO:AT&T Corp; TS:T; 
IG:CMT;) )
AP-NY-12-14-98 1440EST
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http://www.newsday.com/ap/rnmpne0t.htm

Michael E. Etchison
etchison@puc.texas.gov
[opinions mine, not the PUCT's]