California Yellow pages firm sues phone giant AT&T [telecom]

California Yellow pages firm sues phone giant AT&T By SCOTT SMITH, Associated Press

FRESNO, Calif. (AP) -- A California Yellow Pages company filed a lawsuit against AT&T and its corporate partners Wednesday in a dispute over phone book advertising.

The lawsuit filed by Fresno-based Valley Yellow Pages says a rival phone book run by AT&T and Cerberus Capital Management LP are offering illegal, secret discounts to advertisers. The lawsuit seeks an end to the alleged practice and unspecified damages.

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Bill Horne
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I'm no lawyer, but at first this article seemed strange to me because businesses offer private discounts all the time to selected customers.

One sentence in the linked article said: "The laws Alldredge accuses AT&T and its partners of breaking stem from the

1930s and were written to keep large national companies from anticompetitive and fraudulent behavior used to crush smaller businesses."

That leads me to two key questions:

1) Is today's AT&T still considered a "large national company"? Obviously the old Bell System AT&T fell into that category, but since divestiture does it still fit? Verizon is a very large company. Further, the yellow pages marketplace overall has greatly declined, along with telephone directories in general, as users make use of the Internet instead. Given all that, it would seem AT&T's alleged marketplace dominance isn't as big as claimed. In another example, today IBM competes in services that it was once prohibited from doing due to anit-trust laws. 2) In today's free-wheeling deregulated business atmosphere, are those old 1930s laws still applicable? For instance, in the 1930s, banks were strictly limited in size and function, but today they can be nation-wide, offering a variety of financial services. Likewise, many other businesses have evolved into national powerhouses, squeezing out smaller players. Many "big box" retail store chains have destroyed modest sized "Main Street" businesses. Today, tough competition is perceived as a good thing--the marketplace doing its job.
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AT&T may not be the behemoth monopoly that it was before divestiture, but it's still a huge, national business. Due to the increased competition in the telecom industry it has been allowed to reacquire some of its former subsidiaries, and also get back into businesses that it was prohibited from previously.

A huge company like AT&T can operate a subsidiary at a loss, so that they can drive prices down to a level that none of the small competitors can match. The main company subsidizes the subsidiary during this period. Once they're driven out of business, it can then raise prices to normal levels. This is probably what they're complaining about.

It's not the same thing as big box stores out-competing mom-n-pop stores. They offer lower prices due to simple economies of scale, not "predatory pricing" and secret deals.

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Barry Margolin Forums website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.