Public Power - November/December 2007 - (Page 28)

The High Court’s ke Jack in Jack and the Beanstalk, public power must deal with unfriendly giants. Electricity giants often control transmission, base load power, fuel, information and money. They have advantages in participating in organized energy markets. They have political strength. Like storybook heroes, public power heroes (usually) have pure hearts. But they do not have magic. They must use the law to correct abuses of power. The antitrust laws protect against anticompetitive market structure and conduct. Regulatory agencies are supposed to fully consider antitrust principles in their decision making, but often antitrust enforcement is not their highest priority. Therefore, effective antitrust enforcement, crucial to the public’s well-being, is often left to the courts. The antitrust laws bar companies from acting jointly to restrain trade, such as by agreeing to fix prices or divide markets. Illegal activity can include companies jointly building generation and transmission or forming markets to buy and sell power, but excluding smaller utilities from such joint activity. The antitrust laws also bar acts of monopolization, such as companies with monopoly power refusing to deal with smaller competitors in order to maintain or expand their monopoly power. One refusal to deal case, well-known to public power, is the U.S. Supreme Court’s 1973 ruling, Otter Tail Power Co. v. United States. Otter Tail’s refusals to sell transmission and wholesale power to competing or potentially competing municipal utilities were held illegal. The antitrust laws protect public power’s rights to fair access to generation, transmission and power markets. Antitrust Thunderbolts BY ROBERT A. JABLON AND KATHARINE MAPES Li In 2004, the Supreme Court decided Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko. In Trinko, the Supreme Court refused to give antitrust protection to plaintiffs, who alleged that Verizon abused its monopoly power by refusing to deal in essential services. (See “The Trinko Ruling: The Sky Is Not Falling, But It Is Getting Cloudy,” Public Power, May-June 2004.). Earlier this year, in Bell Atlantic Corp. v. Twombly, the Supreme Court further limited antitrust protections, this time by weakening plaintiffs’ ability to sue for parallel conduct in restraint of trade. The Supreme Court also expanded pleading requirements by enlarging what plaintiffs must allege in their court complaints, making it more difficult for plaintiffs to get courts to hear their cases. The court even suggested that anticompetitive conduct can be justified as legitimate business practices if defendants are acting to protect their monopoly power. Twombly has a shocking effect on those who are concerned that cities and others injured by antitrust activities get fair judicial hearings. After Twombly, public power utilities need to be very careful in drafting court complaints. Plaintiffs must demonstrate that defendants’ conduct affords companies illegitimate benefits and results in serious harm to cities and the public that will not be remedied by the marketplace. Plaintiffs’ allegations—The Sherman Antitrust Act makes illegal all contracts, combinations and conspiracies in restraint of trade. Plaintiffs in Twombly alleged that the so-called Baby Bells (BellSouth, Qwest, SBC Communications and Verizon) “engaged in parallel conduct” not to sell in each other’s service areas. They further alleged that these incumbent local exchange carriers (ILECs), agreed both not to compete in each other’s territories and to block competition from new entrants by providing inadequate access to their communications networks. Plaintiffs’ complaint quoted one former CEO as stating that “competing in another ILEC’s territory ‘might be a quick way to make a quick dollar, but that doesn’t make it right.’” In dissent, Justices John Paul Stevens and Ruth Bader Ginsburg noted that “[o]ne possible (indeed plausible) inference” is that he had agreed not to compete. The Supreme Court held that plaintiffs did not allege sufficient facts in their complaint to “plausibly” justify that defendants’ conduct stemmed from ILEC agreements with each other. By doing so, the Supreme Court disregards the requirement in the Federal Rule of Civil Procedure that complaints have “a short and plain statement of the claim showing that the pleader is entitled to relief.” This change in the requirements for complaints may seem unimportant, but in a broad array of cases, it will permit defendants to argue that plaintiffs did not allege “enough facts”

Table of Contents Feed for the Digital Edition of Public Power - November/December 2007

Public Power - November/December 2007 Contents Washington Focus 10 Questions Connecting with the Customer Through Automation AMR or AMI? The High Court’s Antitrust Thunderbolts California’s Push for Demand-Response Plug-In Partners Get Plugged In Wiring Up for Double-Digit Growth For Engineers Safety Community Broadband For Governing Boards DEED Customer Service Hometown Connections Index to Advertisers Parting shot

Public Power - November/December 2007

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