Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Cox cable box rental practices were illegal tie-in, suit says, (Apr 12, 2016)

By Linda O’Brien, J.D., LL.M.

Cable television provider Cox Communications suppressed competition for the sale or lease of set-top boxes and overcharged subscribers for its set-top boxes by illegally tying access to its premium cable service to the rental of set-top boxes, according to a complaint filed in the federal district court in Providence, Rhode Island (Feeney v. Cox Communications, Inc., April 11, 2016).

Cox Communications is one of the largest providers of multi-channel video programming distribution (MVPD) in the United States and offers various types of cable products, including Premium Cable. Consumers Sean Feeney and Louis Grande subscribed to Cox’s Premium Cable service and rented its set-top boxes.

The complaint states that Premium Cable is a high quality, uniquely desirable product that enables subscribers to purchase special programs, on demand, high definition channels, and a range of premium and specialty channels. To access Premium Cable, subscribers need an additional product—a digital receiver or digital converter, commonly referred to as a set-top box—to interface between the MVPD cable and a television.

Consumers who purchase Premium Cable from Cox are also required to rent set-top boxes from Cox. Cox has made this requirement clear on websites and in other communications directed at subscribers and potential subscribers. Cox representatives inform subscribers that if they do not have a set-top box from Cox, they will not be able to access the interactive programming guide, on demand, or pay-per-view services. Additionally, set-top boxes obtained from a source other than Cox will not be able to access all the services and features of Premium Cable, the complaint alleges.

According to the complaint, as one of the largest cable MVPD providers in the country, Cox has the requisite economic power in the market for Premium Cable to force consumers to submit to this illegal tying practice. Statistics purportedly include direct evidence of Cox’s practice of consistently rising prices for Premium Cable without losing customers. In addition, Cox’s illegal tying practices artificially foreclose the amount of potential sales of set-top boxes from sources other than Cox, the complaint asserts. Absent these practices, the cost of set-top boxes, whether purchased or rented, would allegedly be substantially lower.

The plaintiffs assert claims for unlawful tying in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-00171-M-LDA.

Attorneys: Sonja L. Deyoe (Law Offices of Sonja L. Deyoe), Todd M. Schneider (Schneider Wallace Cottrell Konecky Wotkyns, LLP), Allan Kanner (Kanner & Whiteley, LLC), and Joe R. Whatley, Jr. (Whatley Drake & Kallas, LLC) for Sean P. Feeney and Louis W. Grande.

Companies: Cox Communications, Inc.

News: Antitrust RhodeIslandNews