Qwest appeal ends in draw
Court affirms fine, rejects restitution
Associated Press
St Paul Pioneer Post
Wednesday, November 2, 2005

Qwest Communications International and Minnesota utilities regulators battled to a draw in federal appeals court over fines for anti-competitive behavior by the telephone company.

A panel of the 8th Circuit of the U.S. Court of Appeals in St. Paul refused, in a ruling released Tuesday, to overturn a nearly $26 million fine against the Denver-based company that was levied by the state Public Utilities Commission.  But the court also wouldn't reinstate an additional $10 million in restitution that regulators wanted to impose.

Qwest is the dominant local phone service provider in Minnesota and 13 other states.

The commission fined Qwest three years ago, saying the company had undercut local telephone competition through secret agreements with a few local telephone competitors.  Regulators said the action hurt other competitors, in violation of state and federal laws governing local phone competition.

The fine amounted to $10,000 per day for two of the most egregious violations and $2,500 per day on the other 10.

Qwest sued and was able to invalidate the restitution, but not the underlying fine.

The utilities commission and Qwest both appealed.  But the three-judge appeals panel left a lower court ruling intact.

The judges said the commission lacked power to order restitution but properly ordered the fine.

"Given the millions at stake in the telecommunications industry and the legislative decision to punish anti-competitive behavior, the penalty in this case is not in violation of the excessive fines clause," their opinion read.

"We applaud the court for recognizing that it is not the proper role of administrative agencies like the PUC to award dollar damages in disputes between competitors," Qwest spokeswoman Joanna Hjelmeland said.  "Nevertheless, we are disappointed that the underlying fine was upheld and will continue to review the decision to determine our future options."

Staff writer Leslie Brooks Suzukamo contributed to this story.