128
OCTOBER TERM, 1998
Syllabus
certiorari to the united states court of appeals for the second circuit
No. 96-1570. Argued October 5, 1998—Decided December 14, 1998
Respondent Discon, Inc., sold "removal services"—i. e., the removal of obsolete telephone equipment—through petitioner Materiel Enterprises Company, a subsidiary of petitioner NYNEX Corporation, for the use of petitioner New York Telephone Company, another NYNEX subsidiary. After Materiel Enterprises began buying such services from AT&T Technologies, rather than from Discon, Discon filed this suit, alleging that petitioners and others had engaged in unfair, improper, and anticompetitive activities. The District Court dismissed the complaint for failure to state a claim. The Second Circuit affirmed with an exception, holding that certain of Discon's allegations—that Materiel Enterprises paid AT&T Technologies more than Discon would have charged because it could pass the higher prices on to New York Telephone, which could then pass them on to telephone consumers through higher regulatory-agency-approved service charges; that Materiel Enterprises would receive a year-end rebate from AT&T Technologies and share it with NYNEX; that Materiel Enterprises would not buy from Discon because it refused to participate in this fraudulent scheme; and that Discon therefore went out of business—stated a claim under § 1 of the Sherman Act. Noting that the ordinary procompetitive rationale for discriminating in favor of one supplier over another was lacking in this case, and that, in fact, the complaint alleged that Materiel Enterprises' buying decision was anticompetitive, the court held that Discon may have alleged a cause of action under, inter alia, the antitrust rule set forth in Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U. S. 207, 212, that group boycotts are illegal per se. For somewhat similar reasons the court believed the complaint stated a valid conspiracy to monopolize claim under § 2 of the Act.
Held: The per se group boycott rule does not apply to a single buyer's decision to buy from one seller rather than another. Pp. 133-140.
(a) Precedent limits the per se rule in the boycott context to cases involving horizontal agreements among direct competitors. See, e. g., Business Electronics Corp. v. Sharp Electronics Corp., 485 U. S. 717, 734. The per se rule is inapplicable here because this case concerns only a vertical agreement and a vertical restraint, in the form of depriving a supplier of a potential customer. Nor is there a special fea-
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