Pacific Bell Telephone Co. v. linkLine Communications, Inc.

OPINION OF THE COURT PACIFIC BELL TELEPHONE CO. V. LINKLINECOMMUNICATIONS, INC. 555 U. S. ____ (2009) SUPREME COURT OF THE UNITED STATES NO. 07-512 PACIFIC BELL TELEPHONE COMPANY, dba AT&T
CALIFORNIA, et al., PETITIONERS v. LINKLINE
COMMUNICATIONS, INC., et al.

															on writ of certiorari to the united states court of
Appeals for the ninth circuit

															[February 25, 2009]

															   Chief Justice Roberts delivered
the opinion of the Court.

															   The plaintiffs in this case,
respondents here, allege that a competitor subjected them to a
“price squeeze” in violation of §2 of the Sherman Act. They assert
that such a claim can arise when a vertically integrated firm sells
inputs at wholesale and also sells finished goods or services at
retail. If that firm has power in the wholesale market, it can
simultaneously raise the wholesale price of inputs and cut the
retail price of the finished good. This will have the effect of
“squeezing” the profit margins of any competitors in the retail
market. Those firms will have to pay more for the inputs they need;
at the same time, they will have to cut their retail prices to
match the other firm’s prices. The question before us is whether
such a price-squeeze claim may be brought under §2 of the Sherman
Act when the defendant is under no antitrust obligation to sell the
inputs to the plaintiff in the first place. We hold that no such
claim may be brought.

															I

															   This case involves the market for
digital subscriber line (DSL) service, which is a method of
connecting to the Internet at high speeds over telephone lines.
AT&T[ Footnote 1 ] owns much
of the infrastructure and facilities needed to provide DSL service
in California. In particular, AT&T controls most of what is
known as the “last mile”—the lines that connect homes and
businesses to the telephone network. Competing DSL providers must
generally obtain access to AT&T’s facilities in order to serve
their customers.

															   Until recently, the Federal
Communications Commission (FCC) required incumbent phone companies
such as AT&T to sell transmission service to independent DSL
providers, under the theory that this would spur competition. See In re Appropriate Framework for Broadband Access to
Internet over Wireline Facilities , 20 FCC Rcd. 14853, 14868
(2005). In 2005, the Commission largely abandoned this
forced-sharing requirement in light of the emergence of a
competitive market beyond DSL for high-speed Internet service; DSL
now faces robust competition from cable companies and wireless and
satellite services. Id. , at 14879–14887. As a condition
for a recent merger, however, AT&T remains bound by the
mandatory interconnection requirements, and is obligated to provide
wholesale “DSL transport” service to independent firms at a price
no greater than the retail price of AT&T’s DSL service. In re AT&T Inc. and BellSouth Corp. , 22 FCC Rcd.
5662, 5814 (2007).

															   The plaintiffs are four independent Internet
service providers (ISPs) that compete with AT&T in the retail
DSL market. Plaintiffs do not own all the facilities needed to
supply their customers with this service. They instead lease DSL
transport service from AT&T pursuant to the merger conditions
described above. AT&T thus participates in the DSL market at
both the wholesale and retail levels; it provides plaintiffs and
other independent ISPs with wholesale DSL transport service, and it
also sells DSL service directly to consumers at retail.

															   In July 2003, the plaintiffs brought suit in
District Court, alleging that AT&T violated §2 of the Sherman
Act, 15 U. S. C. §2, by monopolizing the DSL market in
California. The complaint alleges that AT&T refused to deal
with the plaintiffs, denied the plaintiffs access to essential
facilities, and engaged in a “price squeeze.” App. 18–19.
Specifically, plaintiffs contend that AT&T squeezed their
profit margins by setting a high wholesale price for DSL transport
and a low retail price for DSL Internet service. This maneuver
allegedly “exclude[d] and unreasonably impede[d] competition,” thus
allowing AT&T to “preserve and maintain its monopoly control of
DSL access to the Internet.” Ibid. In Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP , 540 U. S. 398 , 410
(2004), we held that a firm with no antitrust duty to deal with its
rivals at all is under no obligation to provide those rivals with a
“sufficient” level of service. Shortly after we issued that
decision, AT&T moved for judgment on the pleadings, arguing
that the plaintiffs’ claims in this case were foreclosed by Trinko . The District Court held that AT&T had no
antitrust duty to deal with the plaintiffs, App. to Pet. for Cert.
77a–85a, but it denied the motion to dismiss with respect to the
price-squeeze claims, id. , at 86a–90a. The court
acknowledged that AT&T’s argument “has a certain logic to it,”
but held that Trinko “simply does not involve
price-squeeze claims.” Id. , at 86a. The District Court
also noted that price-squeeze claims have been recognized by
several Circuits and “are cognizable under existing antitrust
standards.” Id. , at 89a, and n. 27.

															   At the District Court’s request, plaintiffs
then filed an amended complaint providing greater detail about
their price-squeeze claims. AT&T again moved to dismiss,
arguing that price-squeeze claims could only proceed if they met
the two established requirements for predatory pricing: below-cost
retail pricing and a “ ‘dangerous probability’ ” that the
defendant will recoup any lost profits. See Brooke Group
Ltd. v. Brown & Williamson Tobacco Corp. , 509 U. S. 209 ,
222–224 (1993). The District Court did not reach the issue whether all price-squeeze claims must meet the Brooke
Group requirements, because it concluded that the amended
complaint, “generously construed,” satisfied those criteria. App.
to Pet. for Cert. 46a–49a, 56a. The court also certified its
earlier order for interlocutory appeal on the question whether
“ Trinko bars price squeeze claims where the parties are
compelled to deal under the federal communications laws.” Id. , at 56a–57a.

															   On interlocutory appeal, the Court of Appeals
for the Ninth Circuit affirmed the District Court’s denial of
AT&T’s motion for judgment on the pleadings on the
price-squeeze claims. 503 F. 3d 876 (2007). The court
emphasized that “ Trinko did not involve a price squeezing
theory.” Id. , at 883. Because “a price squeeze theory
formed part of the fabric of traditional antitrust law prior to Trinko ,” the Court of Appeals concluded that “those claims
should remain viable notwithstanding either the telecommunications
statutes or Trinko .” Ibid . Based on the record
before it, the court held that plaintiffs’ original complaint
stated a potentially valid claim under §2 of the Sherman Act.

															   Judge Gould dissented, noting that “the notion
of a ‘price squeeze’ is itself in a squeeze between two recent
Supreme Court precedents.” Id. , at 886. A price-squeeze
claim involves allegations of both a high wholesale price and a low
retail price, so Judge Gould analyzed each component separately. He
concluded that “ Trinko insulates from antitrust review the
setting of the upstream price.” Id. , at 886–887. With
respect to the downstream price, he argued that “the retail side of
a price squeeze cannot be considered to create an antitrust
violation if the retail pricing does not satisfy the requirements
of Brooke Group , which set unmistakable limits on what can
be considered to be predatory within the meaning of the antitrust
laws.” Id. , at 887 (citing Brooke Group , supra , at 222–224). Judge Gould concluded that the
plaintiffs’ complaint did not satisfy these requirements because it
contained no allegations that the retail price was set below cost
and that those losses could later be recouped. 503 F. 3d, at
887. Judge Gould would have allowed the plaintiffs to amend their
complaint if they could, in good faith, raise predatory pricing
claims meeting the Brooke Group requirements. Ibid .

															   We granted certiorari, 554 U. S. ___ (2008),
to resolve a conflict over whether a plaintiff can bring
price-squeeze claims under §2 of the Sherman Act when the defendant
has no antitrust duty to deal with the plaintiff. See Covad
Communications Co. v. Bell Atlantic Co. , 398
F. 3d 666, 673–674 (CADC 2005) (holding that Trinko bars such claims). We reverse.

															II

															   This case has assumed an unusual
posture. The plaintiffs now assert that they agree with Judge
Gould’s dissenting position that price-squeeze claims must meet the Brooke Group requirements for predatory pricing. They ask
us to vacate the decision below in their favor and remand with
instructions that they be given leave to amend their complaint to
allege a Brooke Group claim. In other words, plaintiffs
are no longer pleased with their initial theory of the case, and
ask for a mulligan to try again under a different theory. Some
amici argue that the case is moot in light of this confession of
error. They contend that “[w]ith both petitioners and respondents
now aligned on [the same] side of the question presented, no
party with a concrete stake in this case’s outcome is
advocating for the contrary position.” Brief for COMPTEL 6.

															   We do not think this case is
moot. First, the parties continue to seek different relief.
AT&T asks us to reverse the judgment of the Court of Appeals
and remand with instructions to dismiss the complaint at issue. The
plaintiffs ask that we vacate the judgment and remand with
instructions that they be given leave to amend their complaint. The
parties thus continue to be adverse not only in the litigation as a
whole, but in the specific proceedings before this Court.

															   Second, it is not clear that the plaintiffs
have unequivocally abandoned their price-squeeze claims. In their
brief and at oral argument, the plaintiffs continue to refer to
their “pricing squeeze claim.” See Brief for Respondents 13. They
appear to acknowledge that those claims must meet the Brooke
Group requirements, but it is not clear whether they believe
the necessary showing can be made in at least partial reliance on
the sort of price squeeze theory accepted by the Court of Appeals.
At one point, for example, the plaintiffs suggest that “the DSL
transport price” may be pertinent to their claims going forward
under the theory of Judge Gould’s dissent; that opinion, however,
concluded that Trinko “in essence takes the issu[e] of
wholesale pricing out of the case.” 503 F. 3d, at 886. Given
this ambiguity, the case before us remains a live dispute
appropriate for decision. Cf. Friends of Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc. , 528 U. S. 167 , 189
(2000) (a party’s voluntary conduct renders a case moot only if it
is “ ‘absolutely clear’ ” the party will take that course
of action).

															   Amici also argue that we should dismiss the
writ of certiorari because of the “lack of adversarial
presentation” by an interested party. Brief for COMPTEL 7. To the
contrary, prudential concerns favor our answering the question
presented. Plaintiffs defended the Court of Appeals’ decision at
the certiorari stage, and the parties have invested a substantial
amount of time, effort, and resources in briefing and arguing the
merits of this case. In the absence of a decision from this Court
on the merits, the Court of Appeals’ decision would presumably
remain binding precedent in the Ninth Circuit, and the Circuit
conflict we granted certiorari to resolve would persist. Two amici
have submitted briefs defending the Court of Appeals’ decision on
the merits, and we granted the motion of one of those amici to
participate in oral argument. 555 U. S. ___ (2008). We think it
appropriate to proceed to address the question presented.

															III

															A

															   Section 2 of the Sherman Act
makes it unlawful to “monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States, or with
foreign nations.” 15 U. S. C. §2. Simply possessing monopoly
power and charging monopoly prices does not violate §2; rather, the
statute targets “the willful acquisition or maintenance of that
power as distinguished from growth or development as a consequence
of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp. , 384 U. S. 563 , 570–571
(1966).

															   As a general rule, businesses are
free to choose the parties with whom they will deal, as well as the
prices, terms, and conditions of that dealing. See United
States v. Colgate & Co. , 250 U. S. 300 , 307
(1919). But there are rare instances in which a dominant firm may
incur antitrust liability for purely unilateral conduct. For
example, we have ruled that firms may not charge “predatory”
prices—below-cost prices that drive rivals out of the market and
allow the monopolist to raise its prices later and recoup its
losses. Brooke Group , 509 U. S., at 222–224. Here,
however, the complaint at issue does not contain allegations
meeting those requirements. App. 10–24.

															   There are also limited circumstances in which
a firm’s unilateral refusal to deal with its rivals can give rise
to antitrust liability. See Aspen Skiing Co. v. Aspen
Highlands Skiing Corp. , 472 U. S. 585 , 608–611
(1985). Here, however, the District Court held that AT&T had no
such antitrust duty to deal with its competitors, App. to Pet. for
Cert. 84a–85a, and this holding was not challenged on
appeal.[ Footnote 2 ]

															   The challenge here focuses on retail
prices—where there is no predatory pricing—and the terms of
dealing—where there is no duty to deal. Plaintiffs’ price-squeeze
claims challenge a different type of unilateral conduct in which a
firm “squeezes” the profit margins of its competitors. This
requires the defendant to be operating in two markets, a wholesale
(“upstream”) market and a retail (“downstream”) market. A firm with
market power in the upstream market can squeeze its downstream
competitors by raising the wholesale price of inputs while cutting
its own retail prices. This will raise competitors’ costs (because
they will have to pay more for their inputs) and lower their
revenues (because they will have to match the dominant firm’s low
retail price). Price-squeeze plaintiffs assert that defendants must
leave them a “fair” or “adequate” margin between the wholesale
price and the retail price. In this case, we consider whether a
plaintiff can state a price-squeeze claim when the defendant has no
obligation under the antitrust laws to deal with the plaintiff at
wholesale.

															B

															   1. A straightforward application
of our recent decision in Trinko forecloses any challenge
to AT&T’s wholesale prices. In Trinko ,
Verizon was required by statute to lease its network elements to
competing firms at wholesale rates. 540 U. S., at 402–403. The
plaintiff—a customer of one of Verizon’s rivals—asserted that
Verizon denied its competitors access to interconnection support
services, making it difficult for those competitors to fill their
customers’ orders. Id. , at 404–405. The complaint alleged
that this conduct in the upstream market violated §2 of the Sherman
Act by impeding the ability of independent carriers to compete in
the downstream market for local telephone service. Ibid. We held that the plaintiff’s
claims were not actionable under §2. Given that Verizon had no
antitrust duty to deal with its rivals at all, we concluded that
“Verizon’s alleged insufficient assistance in the provision of
service to rivals” did not violate the Sherman Act. Id. , at
410. Trinko thus makes clear that if a firm has no
antitrust duty to deal with its competitors at wholesale, it
certainly has no duty to deal under terms and conditions that the
rivals find commercially advantageous.

															   In this case, as in Trinko , the
defendant has no antitrust duty to deal with its rivals at
wholesale; any such duty arises only from FCC regulations, not from
the Sherman Act. See supra , at 8. There is no meaningful
distinction between the “insufficient assistance” claims we
rejected in Trinko and the plaintiffs’ price-squeeze
claims in the instant case. The Trinko plaintiffs
challenged the quality of Verizon’s interconnection service, while
this case involves a challenge to AT&T’s pricing structure. But
for antitrust purposes, there is no reason to distinguish between
price and nonprice components of a transaction. See, e.g. , American Telephone & Telegraph Co. v. Central
Office Telephone, Inc. , 524 U. S. 214 , 223
(1998) (“Any claim for excessive rates can be couched as a claim
for inadequate services and vice versa”). The nub of the complaint
in both Trinko and this case is identical—the plaintiffs
alleged that the defendants (upstream monopolists) abused their
power in the wholesale market to prevent rival firms from competing
effectively in the retail market. Trinko holds that such
claims are not cognizable under the Sherman Act in the absence of
an antitrust duty to deal.

															   The District Court and the Court of Appeals
did not regard Trinko as controlling because that case did
not directly address price-squeeze claims. 503 F. 3d, at 883;
App. to Pet. for Cert. 86a; see also Brief for COMPTEL 27–30. This
is technically true, but the reasoning of Trinko applies
with equal force to price-squeeze claims. AT&T could have
squeezed its competitors’ profits just as effectively by providing
poor-quality interconnection service to the plaintiffs, as Verizon
allegedly did in Trinko . But a firm with no duty to deal
in the wholesale market has no obligation to deal under terms and
conditions favorable to its competitors. If AT&T had simply
stopped providing DSL transport service to the plaintiffs, it would
not have run afoul of the Sherman Act. Under these circumstances,
AT&T was not required to offer this service at the wholesale
prices the plaintiffs would have preferred.

															   2. The other component of a price-squeeze
claim is the assertion that the defendant’s retail prices
are “too low.” Here too plaintiffs’ claims find no support in our
existing antitrust doctrine.

															   “[C]utting prices in order to increase
business often is the very essence of competition.” Matsushita
Elec. Industrial Co. v. Zenith Radio Corp. , 475 U. S. 574 , 594
(1986). In cases seeking to impose antitrust liability for prices
that are too low, mistaken inferences are “especially costly,
because they chill the very conduct the antitrust laws are designed
to protect.” Ibid. ; see also Brooke Group , 509 U.
S., at 226; Cargill, Inc. v. Monfort of Colo.,
Inc. , 479 U. S.
104 , 121–122, n. 17 (1986). To avoid chilling aggressive price
competition, we have carefully limited the circumstances under
which plaintiffs can state a Sherman Act claim by alleging that
prices are too low. Specifically, to prevail on a predatory pricing
claim, a plaintiff must demonstrate that: (1) “the prices
complained of are below an appropriate measure of its rival’s
costs”; and (2) there is a “dangerous probability” that the
defendant will be able to recoup its “investment” in below-cost
prices. Brooke Group , supra , at 222–224. “Low
prices benefit consumers regardless of how those prices are set,
and so long as they are above predatory levels, they do not
threaten competition.” Atlantic Richfield Co. v. USA
Petroleum Co. , 495 U. S. 328 , 340
(1990).

															   In the complaint at issue in this
interlocutory appeal, App. 10–24, there is no allegation that
AT&T’s conduct met either of the Brooke Group requirements. Recognizing a price-squeeze claim where the
defendant’s retail price remains above cost would invite the
precise harm we sought to avoid in Brooke Group : Firms
might raise their retail prices or refrain from aggressive price
competition to avoid potential antitrust liability. See 509 U. S.,
at 223 (“As a general rule, the exclusionary effect of prices above
a relevant measure of cost either reflects the lower cost structure
of the alleged predator, and so represents competition on the
merits, or is beyond the practical ability of a judicial tribunal
to control without courting intolerable risks of chilling
legitimate price cutting”).

															   3. Plaintiffs’ price-squeeze claim, looking to
the relation between retail and wholesale prices, is thus nothing
more than an amalgamation of a meritless claim at the retail level
and a meritless claim at the wholesale level. If there is no duty
to deal at the wholesale level and no predatory pricing at the
retail level, then a firm is certainly not required to price both of these services in a manner that preserves its
rivals’ profit margins.[ Footnote
3 ]

															C

															   1. Institutional concerns also
counsel against recognition of such claims. We have repeatedly
emphasized the importance of clear rules in antitrust law. Courts
are ill suited “to act as central planners, identifying the proper
price, quantity, and other terms of dealing.” Trinko , 540
U. S., at 408. “ ‘No court should impose a duty to deal that
it cannot explain or adequately and reasonably supervise. The
problem should be deemed irremedia[ble] by antitrust law when
compulsory access requires the court to assume the day-to-day
controls characteristic of a regulatory agency.’ ” Id. , at 415 (quoting Areeda, Essential Facilities: An
Epithet in Need of Limiting Principles, 58 Antitrust L. J.
841, 853 (1989)); see also Town of Concord v. Boston
Edison Co. , 915 F. 2d 17, 25 (CA1 1990) (Breyer, C. J.)
(“[A]ntitrust courts normally avoid direct price administration,
relying on rules and remedies . . . that are easier to
administer”).

															   It is difficult enough for courts
to identify and remedy an alleged anticompetitive practice at one
level, such as predatory pricing in retail markets or a violation
of the duty-to-deal doctrine at the wholesale level. See Brooke
Group , supra , at 225 (predation claims “requir[e] an
understanding of the extent and duration of the alleged predation,
the relative financial strength of the predator and its intended
victim, and their respective incentives and will”); Trinko , supra , at 408. Recognizing price-squeeze
claims would require courts simultaneously to police both the
wholesale and retail prices to ensure that rival firms are not
being squeezed. And courts would be aiming at a moving target,
since it is the interaction between these two prices that
may result in a squeeze.

															   Perhaps most troubling, firms that seek to
avoid price-squeeze liability will have no safe harbor for their
pricing practices. See Town of Concord , supra , at
22 (antitrust rules “must be clear enough for lawyers to explain
them to clients”). At least in the predatory pricing context, firms
know they will not incur liability as long as their retail prices
are above cost. Brooke Group , supra , at 223. No
such guidance is available for price-squeeze claims. See, e.g. , 3B P. Areeda & H. Hovenkamp, Antitrust Law
¶767c, p. 138 (3d ed. 2008) (“[A]ntitrust faces a severe problem
not only in recognizing any §2 [price-squeeze] offense, but also in
formulating a suitable remedy”).

															   The most commonly articulated standard for
price squeezes is that the defendant must leave its rivals a “fair”
or “adequate” margin between the wholesale price and the retail
price. See Town of Concord , supra , at 23–25; Alcoa , 148 F. 2d 416, 437–438 (CA2 1945). One of our
colleagues has highlighted the flaws of this test in Socratic
fashion:

															“[H]ow is a judge or jury to determine a ‘fair
price?’ Is it the price charged by other suppliers of the primary
product? None exist. Is it the price that competition ‘would have
set’ were the primary level not monopolized? How can the court
determine this price without examining costs and demands, indeed
without acting like a rate-setting regulatory agency, the
rate-setting proceedings of which often last for several years?
Further, how is the court to decide the proper size of the price
‘gap?’ Must it be large enough for all independent competing firms
to make a ‘living profit,’ no matter how inefficient they may be? .
. . And how should the court respond when costs or demands change
over time, as they inevitably will?” Town of Concord , supra , at 25.

															   Some amici respond to these
concerns by proposing a “transfer price test” for identifying an
unlawful price squeeze: A price squeeze should be presumed if the
upstream monopolist could not have made a profit by selling at its
retail rates if it purchased inputs at its own wholesale rates.
Brief for American Antitrust Institute (AAI) 30; Brief for COMPTEL
16–19; see Ray v. Indiana & Mich. Elec. Co. ,
606 F. Supp. 757, 776–777 (ND Ill. 1984). Whether or not that
test is administrable, it lacks any grounding in our antitrust
jurisprudence. An upstream monopolist with no duty to deal is free
to charge whatever wholesale price it would like; antitrust law
does not forbid lawfully obtained monopolies from charging monopoly
prices. Trinko , supra , at 407 (“The mere
possession of monopoly power, and the concomitant charging of
monopoly prices, is not only not unlawful; it is an important
element of the free-market system”). Similarly, the Sherman Act
does not forbid—indeed, it encourages —aggressive price
competition at the retail level, as long as the prices being
charged are not predatory. Brooke Group , 509 U. S., at
223–224. If both the wholesale price and the retail price are
independently lawful, there is no basis for imposing antitrust
liability simply because a vertically integrated firm’s wholesale
price happens to be greater than or equal to its retail price. 2. Amici assert that there are
circumstances in which price squeezes may harm competition. For
example, they assert that price squeezes may raise entry barriers
that fortify the upstream monopolist’s position; they also contend
that price squeezes may impair nonprice competition and innovation
in the downstream market by driving independent firms out of
business. See Brief for AAI 11–15; Town of Concord , supra, at 23–24.

															   The problem, however, is that amici have not
identified any independent competitive harm caused by price
squeezes above and beyond the harm that would result from a
duty-to-deal violation at the wholesale level or predatory pricing
at the retail level. See 3A P. Areeda & H. Hovenkamp, Antitrust
Law ¶767c, p. 126 (2d ed. 2002) (“[I]t is difficult to see any competitive significance [of a price squeeze] apart from
the consequences of vertical integration itself”). To the extent a
monopolist violates one of these doctrines, the plaintiffs have a
remedy under existing law. We do not need to endorse a new theory
of liability to prevent such harm.

															IV

															   Lastly, as mentioned above,
plaintiffs have asked us for leave to amend their complaint to
bring a Brooke Group predatory pricing claim. We need not
decide whether leave to amend should be granted. Our grant of
certiorari was limited to the question whether price-squeeze claims
are cognizable in the absence of an antitrust duty to deal. The
Court of Appeals addressed only AT&T’s motion for judgment on
the pleadings on the plaintiffs’ original complaint.[ Footnote 4 ] For the
reasons stated, we hold that the price-squeeze claims set forth in
that complaint are not cognizable under the Sherman Act.

															   Plaintiffs have also filed an
amended complaint, and the District Court concluded that this
complaint, generously construed, could be read as alleging conduct
that met the Brooke Group requirements for predatory
pricing. App. to Pet. for Cert. 47a–52a, 56a. That order, however,
applied the “no set of facts” pleading standard that we have since
rejected as too lenient. See Bell Atlantic Corp. v. Twombly , 550 U. S. 544 , 561–563
(2007). It is for the District Court on remand to consider whether
the amended complaint states a claim upon which relief may be
granted in light of the new pleading standard we articulated in Twombly , whether plaintiffs should be given leave to amend
their complaint to bring a claim under Brooke Group , and
such other matters properly before it. Even if the amended
complaint is further amended to add a Brooke Group claim,
it may not survive a motion to dismiss. For if AT&T can
bankrupt the plaintiffs by refusing to deal altogether, the
plaintiffs must demonstrate why the law prevents AT&T from
putting them out of business by pricing them out of the market.
Nevertheless, such questions are for the District Court to decide
in the first instance. We do not address these issues here, as they
are outside the scope of the question presented and were not
addressed by the Court of Appeals in the decision below. See Cutter v. Wilkinson , 544 U. S. 709 , 718, n. 7
(2005) (“[W]e are a court of review, not of first view”).

															*  *  * Trinko holds that a
defendant with no antitrust duty to deal with its rivals has no
duty to deal under the terms and conditions preferred by those
rivals. 540 U. S., at 409–410. Brooke Group holds that low
prices are only actionable under the Sherman Act when the prices
are below cost and there is a dangerous probability that the
predator will be able to recoup the profits it loses from the low
prices. 509 U. S., at 222–224. In this case, plaintiffs have not
stated a duty-to-deal claim under Trinko and have not
stated a predatory pricing claim under Brooke Group . They
have nonetheless tried to join a wholesale claim that cannot
succeed with a retail claim that cannot succeed, and alchemize them
into a new form of antitrust liability never before recognized by
this Court. We decline the invitation to recognize such claims. Two
wrong claims do not make one that is right.

															   The judgment of the Court of
Appeals is reversed, and the case is remanded for further
proceedings consistent with this opinion.

															It is so ordered. Footnote 1 Petitioners consist of several corporate
entities and subsidiaries, and their names and corporate structures
have changed frequently over the course of this litigation. For
simplicity, we will refer to all the petitioners as “AT&T.” Footnote 2 The Court of Appeals assumed that any duty to
deal arose only from FCC regulations, 503 F. 3d, at 878–879,
n. 6, and the question on which we granted certiorari made the
same assumption. Even aside from the District Court’s reasoning,
App. to Pet. for Cert. 77a–85a, it seems quite unlikely that
AT&T would have an antitrust duty to deal with the plaintiffs.
Such a duty requires a showing of monopoly power, but—as the FCC
has recognized, 20 FCC Rcd., at 14879–14887—the market for
high-speed Internet service is now quite competitive; DSL providers
face stiff competition from cable companies and wireless and
satellite providers. Footnote 3 Like the Court of Appeals, 503 F. 3d, at
880, amici argue that price-squeeze claims have been recognized by
Circuit Courts for many years, beginning with Judge Hand’s opinion
in United States v. Aluminum Co. of America , 148
F. 2d 416 (CA2 1945) ( Alcoa ). In that case, the
Government alleged that Alcoa was using its monopoly power in the
upstream aluminum ingot market to squeeze the profits of downstream
aluminum sheet fabricators. The court concluded: “That it was
unlawful to set the price of ‘sheet’ so low and hold the price of
ingot so high, seems to us unquestionable, provided, as we have
held, that on this record the price of ingot must be regarded as
higher than a ‘fair price.’ ” Id. , at 438. Given
developments in economic theory and antitrust jurisprudence since Alcoa , we find our recent decisions in Trinko and Brooke Group more pertinent to the question before us. Footnote 4 We note a procedural irregularity with this
case: Normally, an amended complaint supersedes the original
complaint. See 6 C. Wright & A. Miller, Federal Practice &
Procedure §1476, pp. 556–557 (2d ed. 1990). Here, the District
Court addressed the amended complaint in its 2005 order, App. to
Pet. for Cert. 36a–52a, but the court only certified its 2004
order—addressing the original complaint—for interlocutory
appeal, id. , at 56a–57a. Both parties, as well as the
Solicitor General, have expressed confusion about whether the
amended complaint and the 2005 order are properly before this
Court. See Brief for Petitioners 9, n. 6 (noting “some
ambiguity” about which order was certified); Brief for United
States 17 (“[I]t is unclear whether the 2005 Order and the amended
complaint are properly at issue in this interlocutory appeal”);
Brief for Respondents 8–10. The Court of Appeals majority did not
address any of the District Court’s holdings from the 2005 order,
so we decline to consider those issues at this time. BREYER, J., CONCURRING IN JUDGMENT PACIFIC BELL TELEPHONE CO. V. LINKLINECOMMUNICATIONS, INC. 555 U. S. ____ (2009) SUPREME COURT OF THE UNITED STATES NO. 07-512 PACIFIC BELL TELEPHONE COMPANY, dba AT&T
CALIFORNIA, et al., PETITIONERS v. LINKLINE
COMMUNICATIONS, INC., et al.

															on writ of certiorari to the united states court of
appeals for the ninth circuit

															[February 25, 2009]

															   Justice Breyer, with whom Justice
Stevens, Justice Souter, and Justice Ginsburg join, concurring in
the judgment.

															   I would accept respondents’ concession that
the Ninth Circuit majority’s “price squeeze” holding is wrong, I
would vacate the Circuit’s decision, and I would remand the case in
order to allow the District Court to determine whether respondents
may proceed with their “predatory pricing” claim as set forth in
Judge Gould’s dissenting Ninth Circuit opinion. linkLine
Communications, Inc. v. SBC California, Inc. , 503
F. 3d 876, 887 (2007).

															A “price squeeze” claim finds its natural home in a
Sherman Act §2 monopolization case where the Government as
plaintiff seeks to show that a defendant’s monopoly power rests,
not upon “skill, foresight and industry,” United States v. Aluminum Co. of America , 148 F. 2d 416, 430 (CA2
1945) (Alcoa) , but upon exclusionary conduct, United
States v. Grinnell Corp. , 384 U. S. 563 , 576
(1966). As this Court pointed out in Verizon Communications
Inc. v. Law Offices of Curtis V. Trinko, LLP , 540 U. S. 398 (2004) , the “ ‘ means of illicit exclusion, like
the means of legitimate competition, are myriad.’ ” Id. , at 414 (quoting United States v. Microsoft Corp. , 253 F. 3d 34, 58 (CADC 2001) (en
banc) (per curiam) ). They may involve a “course of
dealing” that, even if profitable, indicates a “willingness to
forsake short-term profits to achieve an anticompetitive end.” Trinko , supra , at 409. See, e.g. , Aspen Skiing Co. v. Aspen Highlands Skiing Corp. , 472 U. S. 585 ,
610–611 (1985); Complaint in United States v. International Business Machines Corp. , Civil Action No. 69
Civ. 200 (SDNY, filed Jan. 17, 1969), ¶20(c), reprinted in F.
Fisher, J. McGowan, & J. Greenwood, Folded, Spindled, and
Mutilated: Economic Analysis and U. S. v. IBM 357
(1983). And, as Judge Hand wrote many years ago, a “price squeeze”
may fall within that latter category. Alcoa , supra , at 437–438 . As a matter of logic, it may
be that a particular price squeeze can only be exclusionary if a
refusal by the monopolist to sell to the “squeezed customer” would
also be exclusionary. But a court, faced with a price squeeze
rather than a refusal to deal, is unlikely to find the latter
(hypothetical) question any easier to answer than the former.

															I would try neither to answer these hypothetical questions here
nor to foreshadow their answer. We have before us a regulated firm.
During the time covered by the complaint, petitioners were required
to provide wholesale digital subscriber line (DSL) transport
service as a common carrier, charging “just and reasonable” rates
that were not “unreasonabl[y] discriminat[ory].” 47 U. S. C.
§§201(b), 202(a) (2000 ed.). And, in my view, a purchaser from a
regulated firm (which, if a natural monopolist, is lawfully such)
cannot win an antitrust case simply by showing that it is
“squeezed” between the regulated firm’s wholesale price (to the
plaintiff) and its retail price (to customers for whose business
both firms compete). When a regulatory structure exists to deter
and remedy anticompetitive harm, the costs of antitrust enforcement
are likely to be greater than the benefits. See Town of
Concord v. Boston Edison Co. , 915 F. 2d 17,
26–29 (CA1 1990) . Cf. 3 P. Areeda & D. Turner,
Antitrust Law ¶¶834–836, pp. 344–355 (1978) (whether a particular
course of conduct counts as “exclusionary” for antitrust purposes
depends upon a host of factors, including, for example, the market
position of the defendant, the nature of the market, and the nature
of the defendant’s conduct).

															   Unlike Town of Concord, the
regulators here controlled prices only at the wholesale level. See
915 F. 2d, at 29. But respondents do not claim that that
regulatory fact makes any difference; and rightly so, for as far as
I can tell, respondents could have gone to the regulators and asked
for petitioners’ wholesale prices to be lowered in light of the
alleged price squeeze. Cf. FPC v. Conway Corp. , 426 U. S. 271 ,
279 (1976); 3 Areeda & Turner, supra , ¶726e, at
219–220.

															   Respondents now seek to show only that the
defendant engaged in predatory pricing, within the terms of this
Court’s decision in Brooke Group Ltd. v. Brown &
Williamson Tobacco Corp. , 509 U. S. 209 (1993).
The District Court can determine whether there is anything in the
procedural history of this case that bars respondents from
asserting their predatory pricing claim. And if not, it can decide
the merits of that claim. As I said, I would remand the case so
that it can do so.