The US Supreme Court rejects "Price-Squeezing" theory of liability (Pacific Bell / linkLine)

On February 25, 2009, the Supreme Court firmly rejected the so-called "price-squeeze" theory of antitrust liability, under which a vertically integrated firm with monopoly power in an upstream market could be found to violate Section 2 of the Sherman Act by selling the upstream product at so high a price and the downstream product (for which the upstream product is an input) at so low a price that its purchasers in the upstream market could not compete against it in the downstream market. The theory was based on United States v. Aluminum Co. of America, 148 F. 2d 416 (2d Cir. 1945) (Alcoa), in which Judge Learned Hand held that such pricing could violate Section 2 if the prices were such that competitors could not earn "a living profit." In Pacific Bell Telephone Co. v. linkLine

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Authors

  • White & Case (New York)
  • John Rue & Associates (Bloomfield)

Quotation

Joseph Angland, John Rue, The US Supreme Court rejects "Price-Squeezing" theory of liability (Pacific Bell / linkLine), 25 February 2009, e-Competitions February 2009, Art. N° 37111

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