Comcast’s class-action setback

Tue, 01/12/2010 - 9:20am
Brian Santo

Comcast lost a procedural matter in court recently, the practical result being that a class-action lawsuit filed against the MSO will continue to be prosecuted.

The suit, titled Behrend v. Comcast, charges that Comcast violated a pair of anti-monopoly provisions of the Sherman Antitrust Act following several system swaps beginning in 1999 and the acquisition of AT&T Broadband in 2001 that allowed Comcast to consolidate clusters in Boston, Chicago and Philadelphia.

Comcast subsequently raised prices in many of these markets; the increase in prices was the trigger for the class-action suit. The plaintiffs argue that the monopoly power Comcast gained when it consolidated systems allowed it to raise prices, which they charge was an abuse of its monopoly position.

The class covered by the suit includes anyone who was a Comcast customer in those markets from 1999 on.

Most recently, the courts have been chewing on procedural issues brought up by Comcast. These issues are essentially whether the charges are merited by the facts, and whether the case can legitimately be prosecuted as a class action.

A decision in favor of Comcast on these points would have profoundly reduced the scope of the lawsuit, or could conceivably have led to a dismissal of the suit.

Instead, the United States District Court for the Eastern District of Pennsylvania determined that the facts of the case meet the legal bar for consideration, and that the suit can be prosecuted as a class action (text of decision, issued on January 7).

This all simply means that the case moves forward. In general, companies in Comcast’s position will sometimes raise new procedural questions. If they don’t, the next phase would be trying the case itself. Either way, it takes months, if not years, for cases of this nature to reach a final resolution.

A tangential but not unimportant issue is that the mere existence of an ongoing anti-trust, anti-monopoly suit could affect Comcast’s proposed purchase of NBC Universal. It’s doubtful the merger could be blocked, but consumers and competitors are agitating that federal approval of the deal be contingent upon the imposition on Comcast of conditions that will prevent the company from abusing the market power it would gain from the combination. Behrend v. Comcast could be trotted out as just another piece of evidence that such conditions are merited.


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