Supreme Court ends Baby Bell antitrust suit

The U.S. Supreme Court Monday said that similar business practices by local telephone companies did not constitute monopolistic activity, ending an antitrust lawsuit.

In its opinion on Twombly v. Bell Atlantic the Court ruled that although companies may be acting in parallel --that is, using seemingly similar business practices or tactics, such as pricing -- there must be further factual evidence to indicate that they were actively working to restrict competition.

"While a showing of parallel 'business behavior is admissible circumstantial evidence from which' agreement may be inferred, it falls short of 'conclusively establish[ing] agreement or...itself constitut[ing] a Sherman Act offense."

The decision means that the Incumbent Local Exchange Carriers (ILOC) -- often referred to as "Baby Bells" -- were not found to have colluded to prevent new players from entering local markets.

The Court voted 7-2, with Justices Ruth Bader Ginsburg and John Paul Stevens dissenting. Justice David Souter wrote the majority opinion.

The case was filed as a class-action suit in 2002, with William Twombly as a the lead plaintiff, alleging that Bell Atlantic -- now part of Verizon Communications -- and other ILOCs neither offered sufficient U.S. Federal Communications Commission-mandated assistance to new entrants nor engaged in active competition.

A federal court dismissed the case as being insufficient to charge monopolistic activity. The U.S. Court of Appeals for the Second Circuit vacated the lower court's judgment in October 2005 and remanded it to the lower court. The plaintiffs then appealed to the Supreme Court, which accepted the case in June 2006.

In 1984, the breakup of Bell Telephone and divestiture of American Telephone & Telegraph from long-distance voice service markets left the U.S. with several regional monopoly carriers offering local service that were prevented from participating in the long-distance market. The Telecommunications Act of 1996 stripped their monopoly service but allowed them to once again offer long-distance service.