Antitrust Law Daily Wrap Up, ANTITRUST—M.D. Fla.: Text messaging vendor unable to bypass anticompetitive claims, (Sep 9, 2014)

By Greg Hammond, J.D.

Syniverse Technologies continues to face antitrust claims, stemming from the company’s termination of a peering services agreement with competitor Iris Wireless LLC. In denying Syniverse’s motion to dismiss the Sherman Act claims, the federal district court in Tampa determined that Iris sufficiently alleged monopolization and attempted monopolization (Iris Wireless LLC v. Syniverse Technologies, September 8, 2014, Moody, J.).

Background. Both Syniverse and Iris are Inter-Carrier Vendors (ICV) that allow wireless telephone service providers to exchange text messages with other service providers through a process called “peering services.” According to the court, there are only three ICV providers in the United States: Syniverse, Iris, and SAP. Iris and Syniverse entered into a peering services agreement in 2004, in which both companies would provide peering services to the other on a “zero pay” basis. In 2011, Syniverse allegedly requested that Iris pay 1.5 cents for every text message Syniverse deemed to be “out of balance” between respective customers. After Iris refused, Syniverse terminated the agreement, and Iris filed suit, alleging monopolization and attempted monopolization under Section 2 of the Sherman Act. Syniverse moved to dismiss the antitrust claims.

Monopolization. To establish a monopoly claim under Section 2 of the Sherman Act, Iris was required to allege: (1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power. In applying the narrow exception in Aspen Skiing Co. v. Aspen Highlands Skiing Corp. (472 U.S. 585, 1985-2 Trade Cases ¶66,653), the court determined that Iris brought a valid monopolization claim, as it adequately alleged that the two companies had a long course of dealing by providing reciprocal peering services at no cost; Syniverse benefitted from the peering services agreement; and Syniverse provided no legitimate procompetitive reason for terminating the agreement.

Attempted monopolization. In order to state a valid attempted monopoly claim under Section 2 of the Sherman Act, Iris was required to demonstrate: (1) an intent to bring about a monopoly, and (2) a dangerous probability of success. According to the court, a dangerous probability of success can be proven only by defining the relevant market. In the instant case, Iris alleged that the relevant market is the market for ICV services in North America, which includes only three ICV service providers. In addition, the company alleged significant barriers to entry in the market, including technological and economical hurdles. The court concluded that Iris sufficiently pleaded dangerous probability of obtaining monopoly power, as Iris alleged Syniverse holds 50 percent or more of the relevant market. Syniverse’s motion to dismiss was therefore denied.

The case number is 8:14-cv-1741-T-30TGW.

Attorneys: Roger A. Colaizzi (Venable, LLP) and Ronald B. Cohn (Arnstein & Lehr, LLP) for Iris Wireless LLC. Troy A. Fuhrman (Hill Ward Henderson, PA) for Syniverse Technologies.

Companies: Iris Wireless LLC; Syniverse Technologies

Cases: Antitrust FloridaNews