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Comcast Urges High Court to Overturn Viamedia Ruling (Corrected)

Sept. 14, 2020, 4:18 PM; Updated: Sept. 15, 2020, 9:27 PM

Comcast Corp. says the U.S. Supreme Court should step in and shut down a monopolization lawsuit over the TV ad placement market, arguing a federal appeals court improperly gave a green light to claims it illegally refused to do business with rival Viamedia Inc.

“Compelled cooperation between rivals contradicts antitrust law’s goal of encouraging competition, and courts are ill-suited to policing the rare exceptions to the general rule,” the company says. “The Seventh Circuit’s expansive approach to refusal-to-deal liability upends this court’s intentional limits on such claims.”

The suit accuses Comcast of leveraging its control over its “interconnect"—a regional clearinghouse for TV advertising availabilities—to force a boycott of Viamedia, its sole competitor in the market for ad placement services in Chicago, Detroit, and Hartford, Conn.

Comcast also refused to let Viamedia use the interconnect at all, the suit says. The “tying” tactic and outright refusal to deal allegedly combined to drive Viamedia out of the three regional markets.

After a federal judge in Chicago threw out the case in 2018, a divided U.S. Court of Appeals for the Seventh Circuit revived it in February.

Although even monopolists generally have no “duty to deal” with competitors, they can’t end a profitable business relationship without any justification other than harming competition, the Seventh Circuit said in a 141-page ruling.

The court also let Viamedia move forward with its allegation that Comcast illegally forces advertisers to use its ad placement services if they want access to its interconnect.

One judge dissented from the part of the ruling that resurrected the tying claim, but the refusal-to-deal reasoning was unanimous. The full appeals court later declined to reconsider the case.

Comcast, in its Supreme Court petition, blasts the Seventh Circuit for seeking to “revive an antitrust theory that this court put to rest.”

The appeals court effectively rejected Comcast’s argument that “cutting out the middleman” for the sake of efficiency was enough of a reason to end its contracts with Viamedia, according to the petition.

The result was a new “balancing” test in place of the well-settled rule that “a legitimate business purpose for a refusal to deal with a rival precludes liability as a matter of law,” because companies “are almost always free to choose with whom they do business,” Comcast says.

Moreover, the “tying” decision would let plaintiffs “repackage” a “justified refusal to deal as illegal tying,” the petition argues.

Both parts of the ruling flout Supreme Court precedent and conflict with other circuit decisions, according to the petition docketed Sept. 10.

Comcast is represented by Gibson, Dunn & Crutcher LLP, Davis Polk & Wardwell LLP, and Jenner & Block LLP. Viamedia was represented in the lower courts by Richard J. Prendergast Ltd. and Kellogg, Hansen, Todd, Figel & Frederick PLLC.

The case is Comcast Corp. v. Viamedia Inc., U.S., No. 20-319, petition for cert. filed 9/10/20.

(Corrects eighth paragraph of Sept. 14 story, which originally misstated part of Seventh Circuit ruling that was unanimous.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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