Antitrust Law Daily Wrap Up, ANTITRUST—D. Ore.: Monopolization claims tossed in mobile phone payment processing suit, (Sep 9, 2015)

By Greg Hammond, J.D.

Multinational telephone billing software and services companies obtained dismissal of monopoly claims in the mobile phone payment processing market. The federal district court in Portland granted the motion to dismiss, finding that the complaining electronic payments and fraud prevention technology company failed to allege anticompetitive activity or antitrust injury (Vesta Corp. v. Amdocs Management Ltd., September 3, 2015, Hernández, M.).

Vesta Corp., an electronic payments and fraud prevention technology company, filed suit against Amdocs Management Ltd. and Amdocs, Inc.—telephone billing software and services companies doing business in Oregon and around the globe. The parties worked together to integrate services and platforms to provide improved marketing opportunities and increased value to joint customers. They also entered into a series of Non-Disclosure/Confidentiality agreements to preserve confidentiality while sharing information. Amdocs subsequently hired a key member of Vesta’s executive sales staff, and Vesta filed suit, alleging the staff member possesses confidential risk information that he will disclose to Amdocs. Vesta additionally brought claims for monopolization and attempted monopolization of the mobile phone payment processing market, as well as monopoly leveraging. Amdocs moved to dismiss.

Although the court determined that Vesta adequately alleged market power, the company failed to sufficiently allege anticompetitive conduct. Vesta claimed two types of anticompetitive conduct: predatory pricing and bundled discounts.

Predatory pricing. Vesta alleged Amdocs engaged in predatory pricing by offering a payment processing solution to T-Mobile that would have resulted in Amdocs providing payment processing services below Amdocs’ average variable costs. In addition, Vesta claims that it cannot sustainably continue to match Amdocs’ pricing and that if Amdocs continues to submit bids at or below its costs for prepaid wireless service provider payment processing services, Vesta will no longer be a viable competitor. The court determined that the complaint lacks factual support for the inference that Amdocs priced their payment processing solutions below their own costs because Vesta failed to identify any figures or estimates of Amdocs’ costs; Vesta did not justify why its own costs are an appropriate measure of Amdocs’, considering they offer different products; and Vesta never addressed that Amdocs’ product does not offer a comparable level of fraud detection as Vesta’s, which—alone—could lead to a significant cost difference.

Bundled discounts. Vesta also argued that the defendants engaged in anticompetitive conduct by offering bundled discounts that were predatory or exclusionary. Specifically, Vesta claimed that Amdocs sold a billing platform and a payment processing solution to MetroPCS and Sprint as a bundle with a below-cost discount, which had the anticompetitive effect of excluding Vesta from the payment processing market. The bundled pricing allegation failed, however, because: (1) Amdocs had already sold MetroPCS a billing platform and there was no allegation that Amdocs discounted the pricing for its billing platform when it sold the payment processing system to MetroPCS, demonstrating that there was no allegation of actual “bundling” of products for sale; and (2) the bundling claims as to costs were the same as the predatory pricing allegation, which was already found inadequate.

Because Vesta failed to demonstrate that Amdocs engaged in anticompetitive conduct, Vesta failed to suffer antitrust injury resulting from Amdocs’ anticompetitive behavior. The monopolization and attempted monopolization claims were consequently dismissed.

Monopoly leveraging. Vesta also brought an independent claim for monopoly leveraging, claiming that Amdocs leveraged their monopoly power in the prepaid mobile phone billing platform market for the purpose and with the specific intent to acquire a monopoly, and that Amdocs have acquired, or are attempting to acquire, a monopoly in the prepaid mobile phone payment processing market, in order to enhance and maintain their monopoly in the prepaid mobile phone billing platform market. The court determined that the claim fails for the same reasons as the other monopolization and attempted monopolization claims—Vesta failed to allege anticompetitive conduct. The monopoly leveraging claim was therefore dismissed.

Motion to transfer venue. The court lastly denied Vesta’s motion to transfer the remaining trade secret misappropriation and breach of contract claims to the Northern District of Texas, finding that the balance of convenience, fairness, and “interest of justice” factors weighed against transfer.

The case number is 3:14-cv-1142-HZ.

Attorneys: Erick J. Haynie (Perkins Coie, LLP) for Vesta Corp. Bruce G. Vanyo (Kateen Muchin Rosenman, LLP) and Joshua L. Ross (Stoll Stoll Berne Lokting & Shlachter, PC) for Amdocs Management Ltd. and Amdocs, Inc.

Companies: Vesta Corp.; Amdocs Management Ltd.; Amdocs, Inc.

Cases: Antitrust OregonNews