## Facts

- Several California cities operated municipal electricity distribution systems and served as exclusive retail suppliers within their boundaries, but did not generate electricity.
- The cities obtained bulk power from Edison or other utilities and received it over Edison’s transmission system.
- Edison, an investor-owned integrated utility, generated, transmitted, and distributed electricity throughout much of central and southern California.
- Edison’s retail rates were set by the California Public Utilities Commission (CPUC), while wholesale rates charged to the cities were set by the Federal Energy Regulatory Commission (FERC).
- The cities alleged Edison violated Sherman Act § 2 by (1) imposing a regulatory price squeeze between FERC-regulated wholesale rates and CPUC-regulated retail rates, and (2) denying access to an essential facility consisting of Edison’s transmission and related power resources.
- After a bench trial, the district court entered judgment for Edison on both theories.

## Issues

1. Whether a regulated utility can be liable under Sherman Act § 2 for a “regulatory price squeeze” when wholesale and retail rates are set by FERC and CPUC.
2. Whether Edison unlawfully denied the cities access to an “essential facility” in violation of Sherman Act § 2.

## Decision

- The Ninth Circuit affirmed the district court’s judgment for Edison.
- The court held the cities failed to prove an actionable § 2 regulatory price squeeze because the relevant wholesale and retail rates were determined through comprehensive agency regulation.
- The court held the essential-facilities claim failed because the challenged facilities and low-cost power were not indispensable: the cities could obtain bulk power from other sources and deliver it using available transmission arrangements, even if at higher cost.

## Legal Principles

- A § 2 price-squeeze theory is severely limited where the defendant’s wholesale and retail rates are set or approved by competent regulatory agencies; antitrust law generally will not be used to rework agency-determined rates.
- The essential-facilities doctrine requires: (1) control of the facility by a monopolist, (2) inability to practically duplicate it, (3) denial of use to a competitor, and (4) feasibility of providing access.
- A facility is not “essential” merely because access would yield lower costs or better competitive terms; the doctrine requires lack of a realistic alternative that would allow the competitor to operate.
- Where a plaintiff can obtain the needed input through other suppliers or arrangements at reasonable rates, the “essentiality” and “denial” elements are not met.

## Conclusion

The Ninth Circuit affirmed judgment for Edison because agency regulation of wholesale and retail rates foreclosed the cities’ § 2 regulatory price-squeeze theory, and the cities could still secure power through alternative sources and transmission arrangements, defeating any claim that Edison controlled and denied an essential facility.


City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373 (9th Cir. 1992)