By Matt Pavich, J.D.
Cable installation subcontractors terminated by cable giant Comcast again failed to adequately allege that Comcast conspired with large cable installers to eliminate competition, because their second amended complaint (SAC) merely alleged a harm to them, not to competition, a federal district court in Pennsylvania has ruled. The court dismissed the SAC with prejudice because the companies failed to cure the defects in their previous complaint (Cable Line, Inc. v. Comcast Cable Communications of Pennsylvania, Inc., May 14, 2018, Mariani, R.).
Background. Comcast terminated the plaintiffs 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 who were also named as defendants in the suit. 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 court earlier dismissed the suit, finding that the allegations were contradictory, that the proximate cause of the companies’ injury was Comcast’s unilateral reduction of subcontractors, and that the companies failed to allege anticompetitive effects in the relevant market. The court also dismissed employment discrimination claims, finding that no allegation that that the minority owned companies were treated less favorable based on the owners’ race. The court granted leave to amend and the companies filed their SAC.
Injury to competition. The court found that the plaintiffs’ injuries stemmed from Comcast’s termination of their business relationship, not from any anticompetitive conduct. It noted that antitrust laws focus only on such anticompetitive conduct, not on harm to individual businesses. Only when the complained-of conduct widely impacts the larger market will courts find an antitrust injury. In this case, the SAC again failed to state whether customers other than Comcast sought the plaintiffs’ business or whether the defendants’ conduct erected barriers to entry for other cable installation companies. Nor did the SAC allege that the purported conspiracy led to a decrease in the demand for installation services. Indeed, the SAC stated that Comcast continued to need those services, but chose the plaintiffs’ competitors. Essentially, the plaintiffs’ injury stemmed from the loss of one client, not from any decline in competition due to Comcast’s conduct and the reduction plan was intended to lower costs, which could benefit consumers.
Monopoly. The court also rejected the allegation that Comcast helped the other installers to develop a monopoly. It noted that the two defending installers could not both have a monopoly in the same region. Moreover, the SAC itself conceded that they got the majority of Comcast’s business because they offered the most competitive rates. The SAC alleged that the other installers underbilled Comcast and manipulated their performance metrics with Comcast’s knowledge, but the court again ruled that even if the allegations were true, they would form the basis of a complaint alleging consumer fraud, but not antitrust violations.
Conspiracy. Furthermore, even if the plaintiffs had adequately pled an antitrust injury, they failed to sufficiently allege an illegal agreement between the defendants. The SAC stated that the other installers only became aware of Comcast’s reduction plan after Comcast had decided to proceed and failed to allege that the installers had any sway on Comcast’s decision. Moreover, the SAC highlighted the lack of any plausible reason for Comcast to conspire with the installers. As the court noted, the SAC alleged that the installers would work below cost, allowing Comcast to get rid of their competition, at which point the installers would get the majority of Comcast’s work, for which it could then charge higher rates. Rather than explaining why Comcast would do this, the SAC offered "vague and conclusory" allegations that the conspiracy was intended to eliminate the installers’ competition.
Relevant market. The court also ruled that the SAC failed to identify a relevant market. It referred to a "Northern Division" encompassing parts of certain states, but failed to offer a justification for defining the market in such a fashion. The court noted that the SAC alleged that the conspiracy operated in the same way both in and out of this market, suggesting that the plaintiffs viewed the market as an area in which they operated. Moreover, the SAC indicated elsewhere that the relevant market was the whole of the United States. Thus, the court held that the plaintiffs failed to state an antitrust claim and dismissed it with prejudice.
The case is No. 3:16-cv-01000-RDM.
Attorneys: Charles D. Mandracchia (Mandracchia & McWhirk, LLC) and Jeffrey Belardi (Belardi Law Offices) for Cable Line, Inc. and McLaughlin Communications Inc. Steven A. Reed (Morgan, Lewis & Bockius LLP) and Joe H. Tucker (Tucker Law Group) for Comcast Cable Communications of Pennsylvania, Inc. Douglas Weiner (Mazzeo Song PC) and 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
MainStory: TopStory Antitrust PennsylvaniaNews
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