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Comcast Advertising Monopoly Claims Revived by Appeals Court (1)

Feb. 24, 2020, 7:00 PMUpdated: Feb. 24, 2020, 9:58 PM

Comcast Corp. must face revived claims it used its control over a regional advertising clearinghouse to monopolize “representation services” that coordinate TV ad placements in Chicago, Detroit, and Hartford, Conn., the Seventh Circuit ruled Monday.

“This is not a case” of anti-monopoly laws “being misused to protect weaker competitors rather than competition more generally,” Judge David Hamilton wrote, sending the case back to Chicago federal court.

The antitrust lawsuit accuses Comcast of leveraging its control over its “interconnect”—the centralized advertising marketplace—to force rival telecoms to boycott the ad coordination services offered by Viamedia Inc., its sole competitor in that arena.

Comcast also refused to let Viamedia use the interconnect at all, the suit says. The two tactics allegedly combined to drive it out of the Chicago, Detroit, and Hartford markets.

Viamedia’s suit will likely be closely watched since its rare plaintiffs are allowed to pursue monopolization claims, let alone win them, Sandeep Vaheesan, legal director at the Open Markets Institute, said.

“Monopolization claims are tough to win these days, they haven’t won yet but the Seventh Circuit has told Viamedia it has the right to take these claims to trial, and that’s a significant win,” Vaheesan said.

Trial Court

A Chicago federal judge dismissed the case, partly for failure to state a claim and partly at the summary judgment stage.

Viamedia failed to show that only an anti-competitive scheme could explain Comcast’s actions, the judge found, saying they could have led to pro-competitive efficiencies.

She also cited the alleged scheme’s limited geographic scope, crediting it as evidence that Comcast didn’t actually impose the anti-competitive terms alleged in the suit.

The U.S. Court of Appeals for the Seventh Circuit revived the case in a 141-page ruling.

The court acknowledged that monopolists generally have no duty to deal with direct competitors. But they do under “limited circumstances,” especially when a company forsakes short-term profits solely to undercut a rival, Hamilton said.

Viamedia adequately pleaded those circumstances, he added, saying it was a relatively easy call that “does not require precise delineation of the” duty-to-deal rule.

The company also offered enough evidence to move forward with its tying claim, the court found.

“Comcast excluded its only competitor in the ad rep services market—gaining a pure monopoly,” Hamilton wrote.

Moreover, the allegations of a “Hobson’s choice,” if true, demonstrate the company’s power to “damage competition beyond the relatively narrow markets” that are directly at issue, he said.

Judge William J. Bauer joined the ruling.

Judge Michael B. Brennan partly dissented. He agreed that Comcast should face liability for refusing to let Viamedia use the interconnect, but rejected most of the rest of the ruling.

Case of interest

Viamedia’s case has drawn interest from the Justice Department’s antitrust division, which in 2018 filed a brief with the Seventh Circuit.

The DOJ, under antitrust chief Makan Delrahim, told the Seventh Circuit that a company’s refusal to deal with others only violates antitrust law in limited circumstances, notably when it makes no economic sense for a firm to engage in such exclusionary behavior.

In the brief, the DOJ took no position on Viamedia’s claims. Critics said the government’s position would help further insulate monopolists from antitrust charges by making it harder for plaintiffs, like Viamedia, to bring a suit.

The appellate court’s ruling demonstrate that it believes “Viamedia has put forward a strong case” showing Comcast’s alleged anticompetitive behavior, said John Bergmayer, Legal Director at Public Knowledge, a non-profit public interest group that has weighed in on the case on Viamedia’s behalf.

Viamedia is represented by Kellogg Hansen Todd Figel & Frederick PLLC. Comcast is represented by Jenner & Block LLP and Davis Polk & Wardwell LLP.

The case is Viamedia Inc. v. Comcast Corp., 7th Cir., No. 18-2852, 2/24/20.

(Updated with additional reporting throughout.)

To contact the reporters on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com; Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

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