Question: Discon Inc specialized in providing the service of removing obsolete

Discon, Inc., specialized in providing the service of removing obsolete telephone equipment. New York Telephone Company was a subsidiary of NYNEX Corporation. Another NYNEX subsidiary, Materiel Enterprises Company, was a purchasing entity that arranged for Discon to provide removal services for New York Telephone. After regularly doing business with Discon, Materiel switched its purchases of removal services from Discon to a Discon competitor, AT&T Technologies. According to Discon, Materiel did this as part of an attempt to defraud local telephone customers and regulatory authorities. Discon contended that Materiel would pay AT&T Technologies more than Discon would have charged for similar removal services, that Materiel would then pass those higher prices on to New York Telephone, and that New York Telephone would in turn pass those prices on to consumers in the form of higher telephone service charges that were approved by the relevant regulatory authorities. Discon further contended that at the end of the year, Materiel would receive a special rebate from AT&T Technologies, and that Materiel would share this rebate with its corporate parent, NYNEX. Discon asserted that because it refused to participate in this fraudulent scheme, Materiel would not do business with Discon, which eventually went out of business. Discon sued Materiel, New York Telephone, and NYNEX, claiming that the above facts constituted a group boycott and thus a per se violation of ยง 1 of the Sherman Act. If Discon's allegations are true, did a per se group boycott take place?

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  • CreatedJuly 16, 2014
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