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The owner of a local Miami television station lacks antitrust standing to allege that Nielsen monopolizes audience rating systems because it could not demonstrate that any other purveyor stood ready to enter the market but for Nielsen's alleged exclusionary conduct, according to a March 4 opinion by the U.S. Court of Appeals for the Eleventh Circuit, which affirmed dismissal of the plaintiff's monopolization claim (Sunbeam Television Corp. v. Nielsen Media Research Inc., 11th Cir., No. 11-10901, 3/4/13).
Sunbeam Television Corp. sued Nielsen Media Research, Inc., which is effectively the only supplier of “television audience measurement services” in the United States. It alleged that Nielsen had monopolized the market for television audience ratings in the Miami-Fort Lauderdale area in violation of Sherman Act §2.
Sunbeam is a customer of Nielsen in the Miami local market and uses Nielsen's ratings in operating WSVN, the FOX-affiliated television station in Miami. Sunbeam complained that Nielsen's latest method for surveying households, the Local People Meter (LPM) method, cut WSVN's ratings by 50 percent immediately upon implementation. Sunbeam complained that the LPM method is flawed and inferior to Nielson's older meter-diary method of counting eyeballs on a given television program and that the LPM method dramatically understates WSVN's actual viewership.
Sunbeam contended that it has been injured not just by introduction of the LPM method of ratings but also by other anticompetitive conduct undertaken by Nielsen to maintain its monopoly status in television audience measurement. As a result, Sunbeam insisted, it paid supracompetitive prices for inferior audience measuring.
Sunbeam alleged that there were three companies willing and able to supply superior audience measurement but for Nielsen's exclusionary conduct: Arbitron, Inc.; ADcom Information Services Company; and erinMedia, LLC. Each of these companies is engaged in a different type of audience measuring, and Sunbeam argued that they could jump to providing services measuring local television audiences if Nielsen would only play fair.
The district court, agreeing with Nielsen that Sunbeam lacks standing to pursue its monopolization claim, granted Nielsen's motion for partial summary judgment. The court concluded that Sunbeam failed to raise an issue of material fact as to whether any of the potential competitors alleged in Sunbeam's complaint is willing and able to provide local television ratings service that could have substituted for Nielsen's service in Miami. The court concluded on that basis that Sunbeam is not an efficient enforcer of antitrust law because its alleged damage lacks a causal nexus to the alleged exclusionary conduct if no one was prepared to step up and enter the market in the first place.
Judge James C. Hill, joined by Chief Judge Joel F. Dubina and Judge William H. Pryor, Jr., upheld the district court's determination that Sunbeam lacks antitrust standing to pursue its claims.
The Eleventh Circuit, Judge Hill noted, employs a two-prong test for antitrust standing: a plaintiff must not only establish that it has suffered an antitrust injury but also must demonstrate that it is an efficient enforcer of antitrust law. The court, noting that the district court jumped right to the second prong, examined whether Sunbeam is an “efficient enforcer” under these circumstances and found that it is not.
The court agreed with the district court that, as stated in Meijer, Inc. v. Biovail Corp., 533 F.3d 857 (D.C. Cir. 2008), Sunbeam cannot bring this conflict within the ambit of antitrust law unless it can demonstrate that a potential competitor stood ready to jump in to supply a superior product but for Nielsen's exclusionary conduct. To do so, Sunbeam must show that the potential competitor took some affirmative steps to enter the business, the court continued, adding that the competitor should have investigated the profitability of entering the market, already had the capability to enter the market, took affirmative steps to get government permits, “etc.,” the court explained.
While Sunbeam argued that test should only apply to competitors seeking to enforce the Sherman Act, the court disagreed. “[W]e are persuaded by the standard set forth by the District of Columbia Circuit in Meijer, and adopted by the district court in this appeal” that the standard should apply whether the plaintiff is a competitor or a customer of the alleged monopolist.
“We agree with the judgment of the district court” that Sunbeam failed to show a competitor stood ready to enter Nielsen's market. Accordingly, the Eleventh Circuit held that the district court properly dismissed Sunbeam's monopolization claim for lack of antitrust standing.
Counsel for appellant: Michael T. Gass, Robert M. Buchanan, Jr., Haim Machluf, and Christine M. O'Connor, Choate Hall & Stewart, LLP, Boston, Mass.; Elaine Johnson James, Berger Singerman, L.L.P., Boca Raton, Fla.; counsel for appellee: Aidan Synnott, Farrah Robyn Berse, Jessica S. Carey, Daniel A. Crane, Leslie Gordon Fagen, Kevin R. Reich, and Brian L. Stekloff, Paul Weiss Rifkind Wharton & Garrison, LLP, New York, N.Y.; Jeffrey Thomas Cook, Nancy A. Copperthwaite, and Stacy J. Harrison, Akerman Senterfitt, LLP, Miami, Fla.
Text of the court's decision is at http://www.bloomberglaw.com/public/document/Sunbeam_Television_Corp_v_Nielsen_Media_Research_Inc_Docket_No_11 -- at Bloomberg Law's website.
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