updated 6/23/2008 1:11:03 PM ET 2008-06-23T17:11:03

The Supreme Court intervened Monday in a lawsuit by an Internet service provider accusing AT&T of anti-competitive practices.

AT&T had asked the justices to step into the dispute over wholesale prices AT&T charges for high-speed service to Internet service providers who then compete with AT&T for retail Internet customers.

AT&T says it is under no obligation to deal with the Internet service providers and that the lawsuit should be thrown out for failing to state a valid legal claim.

The plaintiff in the lawsuit, LinkLine Communications Inc., buys high-speed service from AT&T, combines it with other services and then sells Internet-access service that compete against AT&T.

The 9th U.S. Circuit Court of Appeals in San Francisco ruled against AT&T, saying the telecom company was setting its wholesale prices so high that the Internet service provider could not compete with the low prices AT&T charged in the retail market. The appeals court said that federal courts have recognized such price squeeze allegations for six decades.

The Bush administration had urged the Supreme Court to take the case as AT&T requested.

The case is Pacific Bell Telephone Co. d/b/a AT&T California v. LinkLine Communications Inc., 07-512.

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