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NYNEX Corp. v. Discon, Inc.
United States Supreme Court
525 U.S. 128 (1998)
After the breakup of an existing monopoly on television services, newly independent local telephone companies were required to grant long-distance service providers with physical access to local telephone systems and customers. To accommodate this access, the local telephone companies were required to install new telephone equipment and remove old equipment. A market developed for the removal of old telephone equipment. Discon, Inc. (Discon) (plaintiff), was a company that removed old telephone equipment for New York Telephone Company (NYC Co.), which was owned by NYNEX Corporation (Nynex) (defendant). Materiel Enterprises (Materiel) was also owned by Nynex and was responsible for purchasing removal services for NYC Co. Eventually, Discon was dropped as NYC Co.’s provider of removal services in favor of a competitor of Discon’s, AT&T Technologies. Discon brought a lawsuit, claiming in part that Nynex, Materiel, and NYC Co. had engaged in coordinated anticompetitive activities to remove Discon from the market. The district court dismissed for failure to state a claim, but the court of appeals partially reversed, finding that Nynex’s decision to exclude one supplier for another without a pro-competitive justification supported Discon’s claim. Nynex appealed.
Rule of Law
Holding and Reasoning (Breyer, J.)
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