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Mobile Carriers' ‘Parallel' Text Pricing Didn't Offend Sherman Act §1

Thursday, May 22, 2014

By Tiffany Friesen Milone  

May 19 — A class of text messaging consumers are unable to sustain allegations that four national mobile phone companies—Verizon Wireless, AT&T Inc., Sprint Nextel Corp., and T-Mobile US Inc.—offended Sherman Act §1 by imposing lock-step price increases for unbundled text messages, according to a May 19 decision by the U.S. District Court for the Northern District of Illinois.

Judge Matthew F. Kennelly held that the plaintiffs' theory “requires the inference of a vast, multifaceted, highly coordinated conspiracy dedicated to creating a Potemkin village of seemingly independent analyses to lend paper support to each pricing move.” Such an inference “is unreasonable and unsupported,” he ruled, “and no reasonable jury could find in favor of the plaintiffs on the basis of the evidence,” which “amounts to no more than a showing of consciously parallel conduct.”

In so holding, the court rejected the plaintiffs' purported “smoking gun” evidence—an e-mail by a T-Mobile employee in which the employee referred to a text messaging price increase as “collusive”—on the ground that the employee in question could not have known whether there was, in fact, any collusion because he did not participate in any trade association meetings or have contact with other mobile carriers.

The court further downplayed the plaintiffs' circumstantial evidence, reckoning that the alleged “lock step” price increases were spread out sufficiently to allow each carrier to perform its own internal analysis before making any pricing decision and, as such, were more consistent with independent action than collusion.

Judge Kennelly also denied the plaintiffs' request for a negative inference based on spoliation of evidence. Despite the plaintiffs' assertions to the contrary, he found no evidence that any e-mails or notebooks were destroyed by any defendant for the purpose of hiding adverse information.

The court in 2009 dismissed the plaintiffs' original complaint on similar grounds, but it decided in 2010 to allow an amended complaint to proceed, as affirmed by the Seventh Circuit.

To contact the reporter on this story: Tiffany Friesen Milone in Washington at tmilone@bna.com

To contact the editor responsible for this story: Sheldon B. Richman at srichman@bna.com

Text of the court's decision is at http://www.bloomberglaw.com/public/document/In_re_Text_Messaging_Antitrust_Litigation_Docket_No_108cv07082_ND — at Bloomberg Law's website.

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