Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Comcast allegedly conspired to limit competition in cable installation market, (May 31, 2016)

By Linda O’Brien, J.D., LL.M.

Cable television and Internet service provider Comcast engaged in a conspiracy with local cable installation companies to eliminate competition and allocate the market for cable installation in Pennsylvania, Maryland, Virginia, and West Virginia, according to a complaint filed in the federal district court in Scranton, Pennsylvania (Cable Line, Inc. v. Comcast Cable Communications of Pennsylvania, Inc., May 26, 2016).

Comcast Cable Communications is the largest cable television company in the world by revenue and the largest Internet service provider in the United States. Comcast uses subcontractors to install the cable and hardware that allow individual customers to access Comcast’s products and services, which is typical in the industry, the complaint asserts. Cable Line, Inc., McLaughlin Communications, Inc., Decisive Communications, and Vitel Communications are cable installation companies that compete to install cable for Comcast customers in various regions.

The complaint states that in its 2010 RFP bidding process, Comcast advised successful bidders to “ramp up” operations to support the volume of installation work required in certain regions. In response, Cable Line invested in a new warehouse, purchased additional vehicles, and trained new technicians. McLaughlin established new offices and opened a dispatch center. Unknown to the plaintiffs, at the same time subcontractors were advised to “ramp up,” Comcast had allegedly launched a national subcontractor reduction plan that called for the reduction in the number of regional cable installation firms working for Comcast from 176 to 39 by 2012.

Between February and May 2012, Comcast agreed with Decisive and Vitel to allocate regional cable installation markets in Pennsylvania, Maryland, Virginia, and West Virginia. Additionally, in February 2012, Comcast notified Cable Line and McLaughlin that the business relationships, which had been ratified in the 2010 RFP process, would be terminated in May 2012, the complaint states.

The plaintiffs claim that the defendants conspired to drive competitors out of the cable installation market. As a result of the conspiracy, the plaintiffs were allegedly induced to invest millions of dollars in infrastructure that would be absorbed for a fraction of the cost by Decisive and Vitel. Furthermore, the conspiracy purportedly led to consolidation of the market for cable installation, reduction in the number of firms competing to provide quality service to consumers, flattening wage rates and employment choices for individual installers, and making over-worked “independent contractors” the industry standard in a labor force that once rewarded skilled workers.

According to the complaint, Comcast planned to have smaller, local companies pay the cost of building infrastructure for cable and Internet services in their local communities. Once the local markets were established, Comcast planned to replace the local companies with larger companies that would offer less compensation to installers and pass the cost savings to Comcast.

The plaintiffs assert claims for discrimination in the formation of contracts and conspiracy in restraint of trade in violation of Section 1 of the Sherman Act and the Maryland, Virginia, and West Virginia antitrust laws. The action seeks actual and treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:16-cv-01000-RDM.

Attorneys: Charles D. Mandracchia and Jeffrey Soderberg (Mandracchia Law, LLC) for Cable Line, Inc. and McLaughlin Communications, Inc.

Companies: Cable Line, Inc.; McLaughlin Communications, Inc.; Comcast Cable Communications of Pennsylvania, Inc.; Decisive Communications; Vitel Communications

News: Antitrust PennsylvaniaNews