The Supreme Court Puts the Squeeze on "Price Squeeze" Claims

This morning, in Pacific Bell Telephone Co. v. linkLine Communications, Inc., Case No. 07-512,[1] the Supreme Court wove together multiple strands of recent antitrust precedent, and announced a clear rule relating to “price squeeze” claims. A price squeeze occurs when a vertically integrated firm that possesses monopoly power in a wholesale market simultaneously raises the wholesale price of inputs and cuts the retail price of its products, thus “squeezing” the profit margins of its retail rivals. In linkLine, the Court held that where a firm has no antitrust duty to deal with its rivals at the wholesale level and does not engage in predatory pricing at the retail level, the antitrust laws do not require it to price its products in a manner that preserves its rivals’ profit margins.

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