updated 10/3/2005 4:47:55 PM ET 2005-10-03T20:47:55

A federal appeals court on Monday said an antitrust lawsuit against several of the nation’s largest telecommunications providers over whether they conspired to exclude competitors from their home markets should be allowed to go forward.

In an opinion issued Monday, a three-judge panel of the Second Circuit Court of Appeals overturned a prior lower-court ruling that dismissed the lawsuit against a group of Baby Bells, including Verizon Communications Inc., BellSouth Corp., Qwest Communications and SBC Communications Inc.

The circuit remanded the case to the district court, which had dismissed the case earlier for failure to state a claim for which relief can be granted.

The appeals court decision allows the case to proceed to discovery. However, the appellate court did not rule on the merits of the case.

The lawsuit alleged the telecommunications companies, which control more than 90 percent of local telephone service in the United States, conspired not to compete against one another in their respective geographic markets for local telephone and high-speed Internet services and to prevent competitors from entering those markets.

The complaint says the alleged conspiracy has driven a number of competing local exchange carriers out of business, restrained competition for local telephone and high-speed Internet services and forced consumers to pay higher rates than they would have in a competitive environment.

“BellSouth believes the claims are without merit and we plan to vigorously defend the case,” the company said Monday.

A Verizon spokesman declined comment on Monday, while a SBC spokeswoman didn’t immediately have a comment when reached Monday. A spokesperson for Qwest didn’t immediately return a phone call seeking comment.

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