Seventh Circuit Revives Antitrust Suit Against Comcast

CHICAGO (CN) – The Seventh Circuit ruled Monday that a jury should hear claims that Comcast increased its monopoly over regional cable ad markets by restricting competitors’ access to infrastructure. 

A three-judge panel of the court revived Viamedia’s suit, concluding that it had sufficiently alleged antitrust violations. Further proceedings are remanded to the U.S. District Court for the Northern District of Illinois. 

The Comcast Center in Philadelphia. (AP Photo/Matt Rourke)

Viamedia, which sells advertising services to cable companies and other television content distributors, filed its suit in the district court in 2016, claiming Comcast had effectively shut it out of the cable television advertising market in Detroit, Chicago and Hartford metropolitan areas by requiring distributors in those areas to hire Comcast sales representatives in order to gain access to Comcast-controlled “Interconnects.” 

The suit hinges on Comcast’s control of those Interconnects, which are cooperatives of cable TV providers in a particular region and serve as clearinghouses for regional advertisers to buy ad time on cable networks.

Comcast has control over the lion’s share of U.S. Interconnects, gained through a series of acquisitions. It now controls Interconnects in 15 of the top 25 “designated market areas” in the country, and 26 of the top 50. Viamedia claims that Comcast has abused that control by denying access to those Interconnects to competitors of its ad-services subsidiary Comcast Spotlight.  

Comcast shut Viamedia out of the Interconnects after its access agreements expired in 2012 and began pursuing its clients shortly beforehand, according to Viamedia. While denied access to the Interconnects, two of Viamedia’s clients – the cable companies Wide Open West (WOW!) and RCN Corporation – lost $27 million in ad revenue. The companies ultimately changed representatives. 

“Viamedia’s evidence also supports a finding that WOW! and RCN did not go willingly into Comcast’s arms,” Judge David Hamilton, an Barack Obama-appointee, wrote. “These MVPDs [multichannel video programming distributors] had economically rational reasons for seeking to avoid this entanglement with their dominant competitor, which would naturally have divided loyalties.”

According to evidence presented by Viamedia, Hamilton wrote in the 105-page ruling, Comcast “used its monopoly power over the cooperative Interconnects to force its smaller retail cable television competitors to stop doing business with Viamedia, thereby gaining monopoly power over the market for advertising representation services.” 

Hamilton said that he was convinced by Viamedia’s comparisons to another landmark monopoly suit, Aspen Skiing Co. v. Aspen Highlands Skiing Corp., where the U.S. Supreme Court examined the attempts of a larger skiing company to shut out a smaller competitor and ruled that Aspen Skiing Company’s refusal to deal amounted to illegal monopolization. 

“In light of the similarities, unless the Court meant to limit Aspen Skiing to ski resorts, we see no sound basis to distinguish Viamedia’s case as a matter of law,” Hamilton wrote.

In a partial dissent, Judge Michael Brennan, a Donald Trump-appointee, agreed that Viamedia’s refusal-to-deal claims warranted further proceedings but expressed skepticism at the Aspen comparison.

“Rather than terminate the Interconnects, Comcast encouraged MVPD participation and sought to secure MVPDs’ access to the Interconnects by contracting directly with them,” Brennan wrote. “Comcast acted pursuant to a rational business purpose: Comcast claimed it sought vertical integration and disintermediation, and Viamedia admitted such an efficiency justification in its allegations.”

Brennan also found that the company lacked standing to bring its claim that Comcast unlawfully tied its services to each other and argued that the alleged tying does not appear to breach the Sherman Antitrust Act.

“The last several decades have brought a new regime to antitrust law in the world of exclusionary conduct. Outdated monopolization doctrines have given way to a sharper and narrower understanding of what constitutes exclusionary behavior,” Brennan wrote. “The relevant evidence shows Comcast’s desire to solicit RCN’s and WOW!’s business directly, not the forced purchase of a service that neither RCN nor WOW! wanted.”

Senior Judge William Bauer, a Gerald Ford appointee, also sat on the panel.

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