Wall Street Journal, October 4, 2005
By Chad Bray

NEW YORK — A federal appeals court Monday said an antitrust lawsuit against several of the nation's largest telecommunication providers over whether they conspired to exclude competitors from their geographic markets should be allowed to go forward.

In an opinion issued Monday, a three-judge panel of the Second Circuit Court of Appeals overturned a prior lower court ruling that dismissed the lawsuit against a group of Baby Bells, including Verizon Communications Inc., BellSouth Corp., Qwest Communications and SBC Communications Inc.

The circuit remanded the case to the district court, which had dismissed the case earlier for failure to state a claim for which relief can be granted.

The appeals court decision allows the case to proceed to discovery. However, the appellate court did not rule on the merits of the case.

"Whether the plaintiffs will be able to prevail in response to a motion for summary judgment after discovery or at trial is, of course, an entirely different matter," the three-judge panel said. "We have and express no view as to the merits of the plaintiffs" underlying claims and mean to imply none."

The lawsuit alleged the telecommunications companies, which control more than 90% of local telephone service in the U.S., conspired not to compete against one another in their respective geographic markets for local telephone and high-speed Internet services and to prevent competitors from entering those markets.

The complaint says the alleged conspiracy has driven a number of competing local exchange carriers out of business, restrained competition for local telephone and high-speed Internet services and forced consumers to pay higher rates than they would have in a competitive environment.

"BellSouth believes the claims are without merit and we plan to vigorously defend the case," a company spokesman said Monday.

A Verizon spokesman declined comment, while an SBC spokeswoman didn't immediately have a comment when reached Monday. A spokesperson for Qwest didn't immediately return a phone call seeking comment.

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