GOVERNMENT BACKS SEVENTH CIRCUIT IN COMCAST’S BID FOR SUPREME COURT REVIEW

At the Supreme Court’s request, the acting United States Solicitor General has submitted an amicus brief weighing in on Comcast Corp.’s petition for a writ of certiorari in an antitrust case brought by Viamedia, Inc.  

Comcast is an entertainment and technology company that provides, among other things, cable television services. In so doing, it acts as a “multichannel video programming distributor” (MVPD). While television networks sell advertisements targeted to all viewers of a particular program, they also contract with MVPDs which, in turn, sell geographically targeted “spot advertising.” Because numerous MVPDs compete within each region, advertisers that wish to reach all regional viewers of a particular television program must contract with each separate MVPD. Rather than undergoing separate negotiations, however, MVPDs cooperate in an “Interconnect,” which acts as a clearinghouse for advertising spots that all cooperating MVPDs will broadcast to their subscribers. The Interconnect is typically operated by the largest regional MVPD. In the Chicago and Detroit areas, that MVPD is Comcast.  

Although the Interconnect pools spot advertising from multiple MVPDs, MVPDs also sell some of their advertising slots directly to local advertisers. Most small MVPDs, however, do not have a sales staff or the other resources required to market spot advertisement slots. Accordingly, many obtain advertising-representation (“ad rep”) services through independent providers or from larger, vertically integrated, MVPDs. These service providers act as brokers for small MVPDs to sell ads directly to advertisers as well as to interface with the Interconnect on their behalf. 

Viamedia is such an ad rep service provider. Comcast, on the other hand, is vertically integrated, having a subsidiary that provides ad rep services both to Comcast and to small MVPDs. Viamedia and Comcast therefore compete in the ad rep services market, with many smaller MVPDs preferring Viamedia over hiring their MVPD-competitor, Comcast. 

The litigation now standing at the threshold of the Supreme Court arises out of Viamedia’s allegations that Comcast used its position as the Interconnect Operator to exclude Viamedia—and the small MVPDs it was representing—from the Interconnect, in violation of Section 2 of the Sherman Antitrust Act. In 2012, Viamedia alleges, Comcast abruptly cut off its access to the Interconnect and notified Viamedia’s clients that they could regain access to the Interconnect only by engaging its ad rep services subsidiary. Viamedia’s clients were left with little choice but to retain Comcast as their ad rep services provider. Viamedia contends that Comcast engaged in both an unlawful refusal to deal and an unlawful tying arrangement.  

The Government, as amicus curiae, defended the Seventh Circuit decision reversing both the district court’s dismissal of the refusal to deal allegations and its grant of summary judgment on the tying claim. It argues that “even under the narrowest understanding” of the Supreme Court’s refusal to deal decision in Aspen Skiing Co. v. Aspen Highland Skiing Corp., 472 U.S. 585 (1985), Viamedia stated a claim because (1) the parties had previously engaged in a voluntary and profitable course of conduct together (i.e., the Interconnect); (2) Viamedia was willing to pay market rate for access to the Interconnect; (3) Comcast provided access to the Interconnect to every small MVPD except those serviced by Viamedia; and (4) Comcast’s exclusion of Viamedia’s clients demonstrated a willingness to suffer short-term losses that would make no economic sense without the resulting harm to competition. 

The Government further argues that the Seventh Circuit correctly reversed the district court’s grant of summary judgment on the tying claim. It contends that there was sufficient record evidence to demonstrate that (1) Interconnect access and ad rep services are separate products; (2) Comcast had market power over Interconnect access; and (3) Comcast exploited its control of the Interconnect to take Viamedia’s business for ad rep services. This was not, as Comcast asserts, a claim merely derivative of Viamedia’s refusal to deal claim but rather one for which Comcast may independently be held liable.

The case is Comcast Corp. v. Viamedia, No. 20-319 in the Supreme Court. The Seventh Circuit’s decision is Viamedia, Inc. v. Comcast Corp., 951 F.3d 429 (7th Cir. 2020).