## Facts

- Retail cable and satellite subscribers brought a putative class action against major television programmers and cable/satellite distributors.
- Programmers sold channels wholesale to distributors; distributors sold channel packages retail to subscribers.
- Plaintiffs alleged programmers controlled “must-have” channels and used that leverage to require distributors to also carry less-desired channels.
- Plaintiffs further alleged programmers required distributors to refrain from offering channels on an à la carte (unbundled) basis.
- Plaintiffs claimed consumers were forced to buy large channel packages containing unwanted channels and to pay higher prices than they would in an unbundled market.
- The complaint framed the challenged conduct as a set of vertical agreements restraining trade under § 1 of the Sherman Act, rather than as a traditional per se tying claim.
- The district court dismissed the third amended complaint with prejudice under Rule 12(b)(6), and plaintiffs appealed.

## Issues

1. Whether allegations of forced purchasing of unwanted channels and higher prices from channel bundling plausibly plead an anticompetitive injury to competition required for a § 1 Sherman Act claim.
2. Whether plaintiffs stated a § 1 claim under the rule of reason without alleging reduced output, foreclosure of rivals, barriers to entry, or other marketwide harm to the competitive process.

## Decision

- The Ninth Circuit affirmed dismissal with prejudice for failure to state a § 1 claim.
- The court held plaintiffs failed to allege injury to competition, as distinct from harm to consumers.
- Allegations that bundling reduced consumer choice and increased prices were deemed insufficient absent factual allegations of harm to market competition.
- The court found the complaint did not allege that bundling reduced the number of channels available, stifled new programming, foreclosed rival programmers, impeded entry, restricted supply, or otherwise reduced competition in upstream or downstream markets.
- Certiorari was denied.

## Legal Principles

- A § 1 Sherman Act plaintiff must plead an unreasonable restraint of trade that causes injury to competition, not merely harm to the plaintiff or class.
- Bare conclusory assertions that competition was unreasonably restrained do not satisfy pleading requirements; factual allegations must plausibly show harm to the competitive process.
- Consumer harm (including higher prices or dissatisfaction with product configuration) is not, by itself, antitrust injury unless it flows from an anticompetitive aspect of the challenged conduct.
- Regardless of whether conduct is characterized as tying, exclusive dealing, or another vertical restraint, the plaintiff must plausibly allege marketwide anticompetitive effects (e.g., foreclosure, reduced output, impaired entry, or reduced rivalry).

## Conclusion

The Ninth Circuit held that alleged coercive channel bundling and the absence of à la carte options, even if resulting in unwanted purchases and higher prices, did not state a § 1 Sherman Act claim without plausible allegations that the conduct harmed competition in the relevant markets, and it affirmed dismissal with prejudice.


Brantley v. NBC Universal, Inc., 675 F.3d 1192 (9th Cir. 2012), cert. denied, 133 S. Ct. 573 (2012)