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From Antitrust Law Daily, August 17, 2018

Comcast’s refusal to deal with spot cable ad rep not actionable under antitrust law

By E. Darius Sturmer, J.D.

Comcast Corporation did not violate federal or state antitrust law by refusing to deal with an independent spot cable advertising representative, the federal district court in Chicago has ruled. The complaining ad rep, Viamedia, Inc., asserted that Comcast had unlawfully used its monopoly power over the Interconnects and business infrastructure to exclude independent third-party sales reps from the ad market. Summary judgment was granted in favor of Comcast, and Comcast’s motion to exclude Viamedia’s liability expert’s opinions was granted in part (Viamedia, Inc. v. Comcast Corp., August 16, 2018, St. Eve, A.).

Comcast Corp. is the world’s largest broadcast and cable television provider by revenue, serving more than 22 million cable and high speed Internet subscribers. Its subsidiary, Comcast Spotlight, LP, is the largest spot cable advertising representative. Spot cable advertising fills the time during the two-to-three-minute commercial breaks on cable networks that are reserved for sale by local cable television service providers.

Viamedia is an independent third-party spot cable advertising representative, representing primarily small and medium-size independent cable television service providers that do not maintain their own in-house advertising sales organizations. It directly competes with Comcast Spotlight to represent independent cable operators for their spot cable advertising sales.

In its May 2016 complaint, Viamedia asserted that Comcast used its control over the Interconnects—"one stop shops" where advertisers can purchase spot cable ads on a designated market area-wide basis—and the National Cable Communications joint venture, an advertising clearinghouse, to selectively exclude independent third-party spot cable advertising representatives like itself from competing with Comcast Spotlight. Comcast also allegedly used its dominant power to ban any smaller cable operator wishing to access its Interconnects from doing business with Viamedia. The plaintiff claimed this violated not only the Sherman Act, but the Illinois Antitrust Act, the Michigan Antitrust Reform Act, and the Connecticut Antitrust Act.

The court held later that year that Viamedia sufficiently pled tying and exclusive dealing so as to permit discovery on those claims, but dismissed the refusal to deal claim without. Last year, the court dismissedViamedia’s realleged refusal to deal claim, on the basis that the company did not plead that Comcast’s decision to exclude it from the interconnects was an independently anticompetitive act.

Viamedia could not establish anticompetitive conduct, the court concluded this time. Comcast had no duty to deal with Viamedia, the court reiterated, let alone deal on favorable terms. The court rejected Viamedia’s claim that Comcast’s conduct constituted more than a mere refusal to deal—that in excluding Viamedia, and by extension Viamedia’s customers, from the interconnects and later taking other spot ad sellers’ business, Comcast had engaged in the distinct practices of tying, exclusive dealing, or general exclusionary conduct—because discovery demonstrated otherwise, in the court’s view. The record left no genuine issue of material fact regarding the viability of Viamedia’s alternative theories.

There was no evidence tending to exclude the likelihood that Comcast, rather than tying services, simply refused to deal with Viamedia. That Comcast often entered into standalone sales of the alleged tying product, Interconnect services, belied any inference that it tied its services, the court found. Comcast never told customers that they could not receive an interconnect-only deal standing alone. Viamedia made no showing that Comcast ever withheld this tying product from customers unless they also purchased the alleged tied product, Ad Rep Services. Viamedia’s insistence that comments made by other competitors and Comcast created a genuine issue of fact as to whether there was tying was misplaced, the court added. Viamedia’s expert opinions regarding this supposed tying were unhelpful and contrary to the law and therefore inadmissible, since they rested exclusively on a lay interpretation of evidence already discarded by the court.

There also was insufficient evidence that Comcast engaged in anticompetitive exclusive dealing, the court said. Viamedia did not explain its exclusive dealing claim. The record contained no evidence showing that Comcast raised, planned to raise, or even had the ability to raise prices, or that it reduced or planned to reduce output. Viamedia cited only its exclusion as a competitor and did not produce evidence that Comcast’s exclusive dealings harmed competition. That Comcast’s exclusive deals did not harm competition was further established by the fact that they were "the very deals that MVPD-consumers seek," the court remarked. Viamedia did not dispute this. Viamedia’s claims for otherwise anticompetitive conduct was procedurally barred and meritless, the court added.

Antitrust injury, damages. Even if Comcast could be found to have engaged in anticompetitive conduct, Viamedia could not show that the conduct caused Viamedia’s antitrust injury or damages, the court concluded. Each injury it alleged—lost revenue from Chicago and Detroit interconnects after Comcast refused to renew a 2003 agreement in 2012, lost contracts with MVPDs, lost revenue from a Hartford interconnect, and attendant business expenses and talent loss—was fully attributable to Comcast’s decision to deny Viamedia interconnect access. Viamedia’s own evidence showed that tying and exclusive dealing were not "but for" causes of Viamedia’s injuries; the injuries would have occurred with or without attendant tying and exclusive dealing, the court observed. Viamedia’s evidence of causation did not distinguish between damages caused by competitive and anticompetitive conduct, the court added. Thus, it failed.

The case is No. 1:16-cv-05486.

Attorneys: Mark C. Hansen (Kellogg Hansen Todd Figel & Frederick PLLC) for Viamedia, Inc. Arthur Burke (Davis Polk & Wardwell LLP) for Comcast Corp. and Comcast Spotlight, Inc.

Companies: Viamedia, Inc.; Comcast Corp.; Comcast Spotlight, Inc.

MainStory: TopStory Antitrust IllinoisNews

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