Bells’ Antitrust Argument May Be Losing Ground

Recent court rulings indicate that the Goldwasser argument – which the Bells have been using to address antitrust complaints filed against them -- may be losing steam.

Goldwasser v. Ameritech is a consumer class action suit started in 1997. In Goldwasser, the court found the Bells are not subject to antitrust claims with regard to service they provide to competitors. Instead, such claims of anticompetitive behavior fall under jurisdiction of the FCC, which promulgated the regulations imposed under the Telecom Act that govern competitors’ access to the Bells. In effect, this means the Telecom Act “trumps” the Sherman Antitrust Act, says Dan Berninger, managing director at Pulver.com.

But the rules of the game may be changing.

On Friday, Covad won an appeal in the 11th Circuit Court against BellSouth. The antitrust complaint had initially been dismissed, based on the Goldwasser precedent, at the district court level. The appeals court overrode that decision.

Just four days earlier CoreComm defeated SBC’s motion for dismissal in Ohio District Court.

And in a mid-June ruling on Trinko vs. Bell Atlantic, a federal appeals court said that consumers can sue their local telephone companies for antitrust violations.

“All these rulings started in the same way,” says Berninger, who believes that the Bells are guilty of the antitrust charges filed against them. Every time a company or consumer consortium makes an antitrust complaint, he says, the Bells would “map it to the Telecom Act.”

But with these recent rulings, says Berninger, “Goldwasser doesn’t seem to have much weight anymore.”

That’s meaningful, says Berninger, because now it appears these complaints will actually make it in court and be argued. “It means the cases proceed,” he says. “The Bells want to dismiss these cases outright, and they failed at that. The problem this creates for the Bells is they are all guilty. Once [the complaints] get to trials and get to facts, the Bells will lose.”

BellSouth spokesman Joe Chandler says his company now has “several options” following the appeals court ruling. “It is possible we will ask for a rehearing in the 11th Circuit Appeals Court,” says Chandler, adding. “This is still at the motion to dismiss stage – the very base part of this lawsuit. As the opinion from the court on Friday noted, the standard for a claim surviving a motion to dismiss is exceedingly low. The standard the court has is minimal. We fully expect to prevail in this lawsuit.”

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