Monday, April 2, 2012
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Ninth Circuit Rejects Antitrust Suit Over Cable TV Packaging
By a MetNews Staff Writer
The practice of cable and satellite television companies of selling their product in multichannel packages, rather than allowing customers to subscribe to each channel individually, does not violate the Sherman Act, the Ninth U.S. Circuit Court of Appeals ruled Friday.
The panel swept aside a putative class action by customers against the largest programmers and distributors of cable and satellite television, holding that the plaintiffs failed to show that the “tying” of channels causes antitrust injury.
The suit involves two kinds of tying: the programmers’ requirement that the cable and satellite companies buy multiple channels, such as Fox News Channel and FX, and the companies’ requirement that customers order programming in tiers.
U.S. District Judge Christina A. Snyder of the Central District of California dismissed the third amended complaint for failure to state a claim, a ruling that was affirmed by the appellate panel on Friday.
Judge Sandra M. Ikuta explained that tying arrangements are not per se illegal; the plaintiffs must allege facts showing they are anticompetitive. “Like other vertical restraints, tying arrangements may promote rather than injure competition,” the judge explained; consumers may find a package more attractive than the individual products.
The plaintiffs, she added, must allege an injury to competition, not merely to themselves. The mere fact that someone must purchase a product that they do not want does not establish a violation, the judge said.
Ikuta elaborated:
“We cannot rule out the possibility that competition could be injured or reduced due to a widely applied practice that harms consumers…. But the plaintiffs here have not alleged in their complaint how competition (rather than consumers) is injured by the widespread practice of packaging low- and high-demand channels.
“The complaint did not allege that Programmers’ sale of cable channels in packages has any effect on other programmers’ efforts to produce competitive programming channels or on Distributors’ competition as to cost and quality of service. Nor is there any allegation that any programmer’s decision to offer its channels only in packages constrained other programmers from offering their channels individually if that practice was competitively advantageous. In sum, the complaint does not include any allegation of injury to competition, as opposed to injuries to the plaintiffs.”
Judges Consuelo Callahan and Barry Silverman concurred.
Attorneys on appeal were Maxwell M. Blecher of Blecher & Collins, PC in Los Angeles for the plaintiffs and Glenn D. Pomerantz of Munger Tolles & Olson LLP in Los Angeles and Arthur J. Burke of Davis Polk & Wardwell LLP’s Menlo Park office for the defendants.
The case is Brantley v. NBC Universal, Inc., 09-5678.
Copyright 2012, Metropolitan News Company