The court reversed a decision by the 9th U.S. Circuit Court of Appeals. The San Francisco-based appeals court had ruled the telecom company was setting its wholesale prices so high that an Internet service provider could not compete with the low prices AT&T charged in the retail market.

The plaintiff in the lawsuit, LinkLine Communications Inc., buys access to AT&T's transmission lines. Linkline then competes with AT&T in selling high-speed Internet access.

"Under these circumstances, AT&T was not required to offer this service at the wholesale prices the plaintiff would have preferred," Chief Justice John Roberts wrote.

Roberts was joined in his opinion by Justices Antonin Scalia, Clarence Thomas, Anthony M. Kennedy and Samuel A. Alito. Justices Stephen G. Breyer, Justices Ruth Bader Ginsburg, John Paul Stevens and David H. Souter concurred only with the judgment.

The ruling does not end the case. The justices sent the case back to a trial judge, who can decide whether AT&T was charging too little for its product in hopes of running its competitors out of business.

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