Do Monopolists Have an Obligation to Contract With Competitors? The Seventh Circuit Seems to Think So

Diagram of the interconnect business model, by Paul Zajde.

By: Paul Zajde

Generally, antitrust law assumes that competition between companies is a good thing, but there are notable exceptions to this axiom in Sherman Antitrust Act (“Sherman Act”) interpretation.[1] Viamedia, Inc. v. Comcast Corp., pending petition with the Supreme Court, is the latest civil case where a company is pleading that it is entitled to a contract renewal with a monopolist it competes with.[2] At the pleading stage, the Seventh Circuit found for the non-monopolist plaintiff, Viamedia, and held that a jury could find that Comcast was not in its rights to terminate its contract with Viamedia.[3] The Supreme Court will likely reverse the Seventh Circuit in favor of Comcast, as the holding splits dramatically from other circuits.[4]  

The doctrine of refusal-to-deal, which holds monopolists liable for refusing to deal with competitors, finds its home in two Supreme Court cases—Verizon Communications Inc. v. Law Offices of Curtis V. Trinko[5] and Aspen Skiing, Co. v. Aspen Highlands Skiing Corp.[6] Aspen propagated a murky list of factors, but the essence of the rule precludes a monopolist from halting a profitable contract with a competitor.[7] The Supreme Court’s subsequent Trinko holding clarified Aspen, finding that a monopolist’s “willingness to forsake short-term profits to achieve an anticompetitive end” could establish Sherman Act liability.[8] But the Trinko Court treated Aspen negatively as well, holding it “at or near the outer boundary of [Sherman Act] § 2 liability.”[9] This negative treatment of Aspen is why the Supreme Court is likely to reverse the Seventh Circuit’s Viamedia holding, which seeks to expand Sherman Act § 2 liability in a big way by forcing competitors into business with each other.[10]

Justice Gorsuch penned an opinion on refusal-to-deal while on the Tenth Circuit, and his Sherman Act priors are likely to resurface should the Supreme Court grant Viamedia cert.[11] In Novell, Gorsuch constricted Aspen by requiring a plaintiff to show that the defendant-monopolist’s refusal-to-deal is “irrational but for its anticompetitive effect.”[12] Gorsuch expressed deep concern with expanding liability and turning courts into “central planners” responsible for administering forced, involuntary contracts between competitors.[13]

Regarding Viamedia, Viamedia and Comcast compete—and formerly cooperated—in the spot-cable television advertising market.[14] Viamedia owed its existence to a contract with Comcast, which Comcast subsequently refused to renew, ultimately bankrupting Viamedia.[15] Viamedia argues that Comcast only terminated the contract to eliminate Viamedia as a competitor.[16] The Seventh Circuit held that Viamedia had pled enough facts to warrant a trial, which is likely inconsistent with Aspen, Trinko, and Novell.[17]

Comcast’s central argument, which has been successful in other circuits,[18] is that it was vertically integrating—conduct which is generally presumed to be procompetitive and permissible under the Sherman Act.[19] The Internet & Television Association, the Washington Legal Foundation, Scholars of Economics and Antitrust, and the U.S. Chamber of Commerce have filed amicus briefs supporting Comcast’s vertical integration argument.[20]

Impact on the Business Law Community

As Justice Gorsuch fears, expanding refusal-to-deal liability would profoundly affect monopolists and the companies with whom they contract.[21] If Aspen is interpreted as placing a low burden for plaintiffs, will monopolists choose not to contract with competitors in the first place out of fear of future liability?[22] And if companies contracting with monopolists know their contracts are interminable thanks to judicial protection, will those companies lose the incentive to innovate?[23] Consumers are unlikely to benefit from forced-dealing if it creates stagnant industries managed by the judiciary.[24]


[1] See 15 U.S.C. § 2; see also U.S. Dep’t of Just., Competition and Monopoly:  Single-Firm Conduct Under Section 2 of the Sherman Act, ch. 7 (2008), https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act (withdrawn in 2009).

[2] 951 F.3d 429 (7th Cir. 2020).

[3] See Viamedia, 951 F.3d at 485.

[4] See Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117 (2nd Cir. 2007); Aerotec International, Inc. v. Honeywell International, Inc., 836 F.3d 1171 (9th Cir. 2016); Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188 (10th Cir. 2009); Novell, Inc. v. Microsoft Corp., 731 F.3d 1064 (10th Cir. 2013).

[5] 540 U.S. 398 (2004).

[6] 472 U.S. 585 (1985).

[7] See Aspen, 472 U.S. at 608 (establishing that the monopolist-defendant may successfully defend itself with “efficiency justification[s]” for refusing to contract with a former competitor-partner).

[8] See Trinko, 540 U.S. at 409.

[9] Id.

[10] See id. (cautioning that overzealous antitrust intervention could potentially “chill the very conduct the antitrust laws are designed to protect”); see also U.S. Dep’t of Just., supra note 1 (arguing that refusals to contract with rivals “should not play a meaningful role in [S]ection 2 enforcement”); see generally Viamedia, Inc. v. Comcast, Corp., 951 F.3d 429 (7th Cir. 2020).

[11] See Novell, Inc. v. Microsoft Corp., 731 F.3d 1064 (10th Cir. 2013); see also Noah Feldman, The Supreme Court Is Still Capable of Shocking the Nation, Bloomberg (Jul. 13, 2020, 3:11 PM), https://www.bnnbloomberg.ca/the-supreme-court-is-still-capable-of-shocking-the-nation-1.1464730

 (characterizing Gorsuch as bidding “to become the intellectual leader of the conservative wing of the court”).

[12] See Novell, 731 F.3d at 1075–77.

[13] Id. at 1073.

[14] See Viamedia, 951 F.3d at 429.

[15] Id. at 442.

[16] Id. at 450 (finding that the trial court dismissed Viamedia’s claim for failing to plead facts showing that Comcast’s decision was irrational but for its anticompetitive effects).

[17] See generally id.; see Frank H. Easterbrook, On Identifying Exclusionary Conduct, 61 Notre Dame L. Rev. 972, 976, 980 (1986) (claiming that plaintiffs should have the burden of disproving, at the pleading stage, the defendant’s business justification); see also supra notes 7, 8, 11 and accompanying text.  

[18] See supra note 4 and accompanying text.

[19] See Brief for Washington Legal Found. as Amicus Curiae Supporting Pet’rs at 3–4, Comcast v. Viamedia, 951 F.3d 429 (7th Cir. 2020), petition for cert. filed (Sept. 4, 2020) (No. 20-319) (arguing that the Seventh Circuit erred when describing Comcast’s conduct in terms other than pure vertical integration); see also Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117, 125–26 (2nd Cir. 2007) (holding that a monopolist’s vertical integration is presumed to be procompetitive and that it was incumbent on the plaintiff to plead facts plausibly suggesting an anticompetitive aspect).

[20] See Brief for The U.S. Chamber of Commerce of America as Amicus Curiae Supporting Pet’rs at 16, Comcast v. Viamedia, 951 F.3d 429 (7th Cir. 2020), petition for cert. filed (Sept. 4, 2020) (No. 20-319); Brief for Scholars of Econ. and Antitrust as Amicus Curiae Supporting Pet’rs at 5, Comcast v. Viamedia, 951 F.3d 429 (7th Cir. 2020), petition for cert. filed (Sept. 4, 2020) (No. 20-319); Brief for Washington Legal Found. as Amicus Curiae Supporting Pet’rs, supra note 19, at 3–4; Brief for NCTA – The Internet & Television Ass’n as Amicus Curiae Supporting Pet’rs at 3, Comcast v. Viamedia, 951 F.3d 429 (7th Cir. 2020), petition for cert. filed (Sept. 4, 2020) (No. 20-319).

[21] See Novell, Inc. v. Microsoft Corp., 731 F.3d 1064 (10th Cir. 2013).

[22] See U.S. Dep’t of Just., supra note 1.

[23] Id.

[24] See Novell, 731 F.3d at 1075–77.

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