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1
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SYLLABUS
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EXTRACTED KEY WORDS
MATERIEL ENTERPRISES COURT YORK TELEPHONE PETITIONERS COMPETITORS UNITED STATES COMPLAINT OPINION NYNEX TECHNOLOGIES BOYCOTT MONOPOLIZE COMPETITIVE PROCESS PRECEDENT HORIZONTAL AGREEMENTS BUSINESS MARKET REGULATORY AGENCY HARM CONSUMERS REGULATORY ALLEGE REASONS CHARGES PRICES SUPPLIER ANTITRUST GROUP BOYCOTTS CONSPIRACY |
(Bench Opinion) OCTOBER TERM, 1998 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
NYNEX CORP. ET AL. v. DISCON, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT
No. 961570. Argued October 5, 1998- Decided December 14, 1998
Respondent Discon, Inc., sold "removal services"- i.e., the removal of
obsolete telephone equipment- through petitioner Materiel Enter-
prises Company, a subsidiary of petitioner NYNEX Corporation, for
the use of petitioner New York Telephone Company, another NYNEX
subsidiary. After Materiel Enterprises began buying such services
from AT&T Technologies, rather than from Discon, Discon filed this
suit, alleging that petitioners and others had engaged in unfair, im-
proper, and anticompetitive activities. The District Court dismissed
the complaint for failure to state a claim. The Second Circuit af-
firmed with an exception, holding that certain of Discon's allega-
tions- that Materiel Enterprises paid AT&T Technologies more than
Discon would have charged because it could pass the higher prices on
to New York Telephone, which could then pass them on to telephone
consumers through higher regulatory-agency-approved service
charges; that Materiel Enterprises would receive a year-end rebate
from AT&T Technologies and share it with NYNEX; that Materiel
Enterprises would not buy from Discon because it refused to partici-
pate in this fraudulent scheme; and that Discon therefore went out of
business- stated a claim under §1 of the Sherman Act. Noting that
the ordinary procompetitive rationale for discriminating in favor of
one supplier over another was lacking in this case, and that, in fact,
the complaint alleged that Materiel Enterprises' buying decision was
anticompetitive, the court held that Discon may have alleged a cause
of action under, inter alia, the antitrust rule set forth in Klor's, Inc. v.
Broadway-Hale Stores, Inc., 359 U. S. 207, 212, that group boycotts are
illegal per se. For somewhat similar reasons the court believed the
complaint stated a valid conspiracy to monopolize claim under §2 of the
Act.
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2
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AMICUS US FTC TO VACATE JUDGMENT
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EXTRACTED KEY WORDS
PETITIONERS APPEALS SUPPLIER UNITED STATES GROUP BOYCOTT MONOPOLY POWER AGREEMENT MONOPOLIZE UNLAWFUL GROUP BOYCOTT SHERMAN ACT PET PURCHASER COMPETING SUPPLIER INTENT DISCON REMOVAL SERVICES NYNEX CONSPIRACY FEDERAL TRADE COMMISSION ACQUISITION REGULATORY NYT ANTICOMPETITIVE EFFECTS REGULATORY EVASION SCHEME COMPETITION LOCAL TELEPHONE NORTHWEST WHOLESALE STATIONERS MECO MAINTENANCE |
No. 96-1570
_______________________________________________________________________
In the Supreme Court of the United States
OCTOBER TERM, 1997
__________________
NYNEX CORPORATION, ET AL., PETITIONERS
v.
DISCON, INCORPORATED
___________________
ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
BRIEF FOR THE UNITED STATES AND THE
FEDERAL TRADE COMMISSION AS AMICI CURIAE
IN SUPPORT OF VACATING THE JUDGMENT
___________________
Seth P. Waxman
Solicitor General
Counsel of Record
Joel I. Klein
Assistant Attorney General
Lawrence G. Wallace
Deputy Solicitor General
A. Douglas Melamed
Deputy Assistant Attorney
General
Barbara McDowell
Assistant to the Solicitor
General
Catherine G. O'Sullivan
Mark S. Popofsky
Attorneys
Debra A. Valentine Department of Justice
General Counsel Washington, D.C. 20530-0001
Federal Trade Commission (202) 514-2217
Washington, D.C. 20580
_____________________________________________________________
QUESTIONS PRESENTED
1. Whether an agreement between a purchaser and
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3
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AMICUS US FTC
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EXTRACTED KEY WORDS
PETITIONERS MARKET APPEALS UNITED STATES DISCON POWER CONSPIRACY PRICE REGULATORY OPINION SHERMAN ACT NYNEX MONOPOLIZE MONOPOLY POWER PET REMOVAL SERVICES ANTICOMPETITIVE EFFECTS GROUP BOYCOTT FEDERAL TRADE COMMISSION CIRCUMVENTION CERTIORARI AMICI CURIAE PROCOMPETITIVE JUSTIFICATION NYT EXCLUDE DISCON NYNEX CORPORATION REGULATORY CONSTRAINTS JURISDICTION TYING ARRANGEMENTS |
No.
96-1570
In the Supreme Court of The United States
OCTOBER TERM, 1997
NYNEX CORPORATION, ET AL., PETITIONERS
V.
DISCON,
INCORPORATED
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
BRIEF FOR THE UNITED STATES AND THE
FEDERAL TRADE COMMISSION AS AMICI CURIAE
SETH P. WAXMAN
Solicitor
General
JOEL I. KLEIN
Assistant Attorney General
LAWRENCE G. WALLACE
Deputy Solicitor General
A. DOUGLAS MELAMED
Deputy Assistant Attorney
General
BARBARA Mc DOWELL
Assistant to the Solicitor
General
CATHERINE G. O'SULLIVAN
MARK S. POPOFSKY
DEBRA A. VALENTINE Attorneys
General Counsel Department of Justice
Federal Trade Commission Washington, D.C. 20530-0001
Washington, D.C. 20580 (202) 514-2217
QUESTIONS
PRESENTED
1. Whether the court of appeals correctly held that
a seller stated a claim under Section 1 of the Sherman
Act, 15 U.S.C. 1, by alleging that it was excluded from
the market as part of a conspiracy between a rival
SNIPPETS:
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4
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SUPREME COURT OPINION
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EXTRACTED KEY WORDS
DISCON COMPETITION GROUP BOYCOTT UNITED STATES ANTITRUST OPINION SECOND CIRCUIT YORK TELEPHONE NYNEX AGREEMENT APPEALS REMOVAL SERVICES COMPLAINT COMPETITOR PETITIONERS BUSINESS ANTITRUST LAW MATERIEL ENTERPRISES CERTIORARI LOCAL TELEPHONE COMPETITIVE PROCESS REGULATORY FORMAL REVISION PRELIMINARY PRINT UNITED STATES REPORTS SUPREME COURT FORMAL ERRORS NYNEX CORPORATION BROADWAY-HALE STORES |
Cite as: ____ U. S. ____ (1998) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 961570
_________________
NYNEX CORPORATION, ET AL., PETITIONERS v.
DISCON, INCORPORATED
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[December 14, 1998]
JUSTICE BREYER delivered the opinion of the Court.
In this case we ask whether the antitrust rule that
group boycotts are illegal per se as set forth in Klor's, Inc.
v. Broadway-Hale Stores, Inc., 359 U. S. 207, 212 (1959),
applies to a buyer's decision to buy from one seller rather
than another, when that decision cannot be justified in
terms of ordinary competitive objectives. We hold that the
per se group boycott rule does not apply.
I
Before 1984 American Telephone and Telegraph Com-
pany (AT&T) supplied most of the Nation's telephone
service and, through wholly owned subsidiaries such as
Western Electric, it also supplied much of the Nation's
telephone equipment. In 1984 an antitrust consent decree
took AT&T out of the local telephone service business and
left AT&T a long-distance telephone service provider,
competing with such firms as MCI and Sprint. See M.
Kellogg, J. Thorne, & P. Huber, Federal Telecommunica-
tions Law §4.6, p. 221 (1992). The decree transformed
AT&T's formerly owned local telephone companies into
independent firms. At the same time, the decree insisted
2 NYNEX CORP. v. DISCON, INC.
Opinion of the Court
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