Antitrust Law Daily Cable installers failed to allege antitrust claim against Comcast
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Monday, April 22, 2019

Cable installers failed to allege antitrust claim against Comcast

By Nicole D. Prysby, J.D.

Antitrust claim against Comcast failed for lack of allegations demonstrating an unlawful monopsony or an unlawful hub-and-spoke conspiracy.

Cable installers whose contracts with Comcast were terminated as part of a subcontractor reduction plan failed to adequately allege an antitrust claim, held the U.S. Court of Appeals in Philadelphia. The installers mistakenly believed that they had successfully completed a Request for Proposal process and alleged that they had, at Comcast’s urging, ramped up operations at considerable cost. Their antitrust claims were properly dismissed by a federal district court because they failed to allege either an unlawful monopsony or an unlawful hub-and-spoke conspiracy. The complaint did not allege how, if at all, Comcast unlawfully excluded rivals from the market for cable installation; therefore, the monopsony claim fails. The hub-and-spoke theory failed because the complaint did not allege facts to infer an agreement between Comcast and the two winning bidders, and it directly acknowledges that they did not know Comcast was aiming to induce consolidation in the cable installation market until after the Request for Proposal process. The court also held that the installers’ discrimination claims were waived (Cable Line, Inc. v. Comcast Cable Communications of Pennsylvania, Inc., April 19, 2019, Ambro, T.).

Background. The cable installation subcontractors were terminated by Comcast under its "national subcontractor reduction plan," which cut its cable installation subcontractors from 176 to 39 firms nationwide. The companies mistakenly believed that they had successfully completed a Request for Proposal process and alleged that they had, at Comcast’s urging, ramped up operations at considerable cost. Comcast did not award them any contracts, but continued working with two other installers (Vitel Communications. Inc., and Decisive Communications). The complaining companies were forced to close their business and filed suit alleging that Comcast and the other installers had conspired to consolidate the market for cable installation in specific municipalities and otherwise reduce the number of cable installation companies. The district court held the antitrust claim failed because the plaintiffs did not adequately allege (1) antitrust injury, (2) conspiracy, and (3) anticompetitive effects. It also held the discrimination claim failed because, although the plaintiffs pointed to a race-based selection criterion in Comcast’s computer system, their other allegations undermined the theory that Comcast chose an installer based on race.

Antitrust claim. The Third Circuit agreed that the antitrust claim failed because the installers failed to allege either an unlawful monopsony or an unlawful hub-and-spoke conspiracy. To plead a monopsony claim, a plaintiff must allege monopsony power and conduct by the monopsonist that excludes its rivals—i.e., other buyers in the same market. Comcast is not the only buyer of cable installation services in the relevant regions, but the complaint did not allege any facts concerning those other companies and how, if at all, Comcast unlawfully excluded them from the market for cable installation. Absent those allegations, the complaint did not adequately allege the relevant market. Essentially, the installers asked the court to impose antitrust "monopsony" liability merely because purchaser Comcast decided to reduce the number of its suppliers. The court declined to extend antitrust liability to include such claims.

The hub-and-spoke based conspiracy theory also failed, according to the appellate court. The plaintiffs asserted that Comcast, Decisive, and Vitel formed a hub-and-spoke conspiracy to restrain trade in the cable installation market, but their own allegations defeat the claim. The complaint not only did not allege facts to infer an agreement between Decisive and Vitel, it directly acknowledges that they did not know Comcast was aiming to induce consolidation in the cable installation market until Comcast completed its Request for Proposal process. Therefore, the plaintiffs failed to adequately allege the agreement element of a hub-and-spoke conspiracy.

The court noted that the installers had not made a tying and exclusive dealing claim, and that it therefore was not expressing a view on whether an antitrust claim could be made against Comcast based on allegations that it extracts monopoly-like margins in the cable installation market by using exclusive cable installers and tying their service to a service over which it may have monopoly power (cable service).

Discrimination claim waived. The plaintiffs alleged that Comcast violated 42 U.S.C. § 1981 by choosing Vitel as an exclusive cable installer because it is an African-American-owned business. However, in their opening brief, they devoted less than a page to this claim, failed to state the applicable legal standard, and cited neither the complaint nor any legal authority. Therefore, the claim was waived.

This case is No. 18-2316.

Attorneys: Charles D. Mandracchia (Mandracchia Law LLC) for Cable Line Inc. and McLaughlin Communications Inc. Steven A. Reed (Morgan, Lewis & Bockius LLP) for Comcast Cable Communications of Pennsylvania Inc. Donald M. Lewis III (Keefer Wood Allen & Rahal LLP) for Decisive Communications. Joseph A. O'Brien (Oliver Price & Rhodes) for Vitel Communications.

Companies: Cable Line Inc.; McLaughlin Communications Inc.; Comcast Cable Communications of Pennsylvania Inc.; Decisive Communications; Vitel Communications

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