(CN) – Exclusive contracts to provide phone, TV and Internet services to apartment complexes and other multi-unit buildings don’t violate federal antitrust laws, the 5th Circuit ruled, affirming dismissal of a class action over the so-called “Triple Play” services.
There are “too many competitive forces” involved in those contracts to be “sufficiently isolated and thus economically significant” under the Sherman Antitrust Act, according to the three-judge panel in Houston.
Residents of a San Antonio apartment complex filed the class action on behalf of people in five states who live in multi-unit buildings that give AT&T the exclusive right to provide Triple Play services of phone, television and Internet.
Class members said the agreements ran afoul of the Sherman Act because they constitute an “illegal restraint on trade and an attempt to monopolize the Triple Play services market.”
For that to be the case, however, the class had to prove that a multiple dwelling unit, or MDU, constitutes a “geographic market” as defined in the Act.
The district court ruled that the class failed to prove this, and the New Orleans-based appeals court agreed.
“It is undisputed that MDUs compete with each other for a tenant’s business,” Judge Thomas Reavley wrote for the court. “Accordingly, an MDU owner has an incentive to provide the lowest cost and highest quality services to attract a tenant’s business. It is therefore in the interest of each service provider to provide lower-cost and higher-quality services than its competitors in order to attract the MDU’s business.”
Also, before tenants sign a lease, they are free to shop around for the best available Triple Play services offered, the court noted.
“Therefore, the cost and quality of Triple Play services likely play a factor in where a tenant chooses to live. If a tenant does not like the services of a particular MDU, that tenant can make other living arrangements,” Reavley wrote.
The judge added that the average lease “rarely lasts more than a year,” so a tenant is never locked in to a specific contract for long.
“[G]iven the competition that exists between MDU owners, the competition that exists between service providers, and given the highly mobile nature of today’s society,” he wrote, “we cannot hold that a single MDU is so segregated as to be economically significant and thus represents a plausible geographic market.”