This section contains the nature of the case and procedural background.

After a nationwide monopoly on telephone service was broken up and regional companies were formed to provide local service, it became necessary to remove old switching equipment and install new equipment. P was in the business of providing such removal services. P sold 'removal services' through Materiel Enterprises Company, a subsidiary of D, for the use of New York Telephone Company, another D subsidiary. D began buying such services from AT&T Technologies, rather than from P. P sued Ds claiming in part that they had engaged in coordinated anticompetitive activities to remove P from the market. D had connections to the prior monopoly as it used to be part of AT&T. The district court dismissed the complaint for failure to state a claim. P appealed, and the appeals court reversed in part in that certain of P's allegations -- that Materiel Enterprises paid AT&T Technologies more than P 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 P; that Materiel Enterprises would not buy from P because it refused to participate in this fraudulent scheme; and that P, therefore, went out of business -- stated a claim under § 1 of the Sherman Act. D appealed.

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