Brantley v. NBC Universal, Inc.

To state a valid claim under the Sherman Act, 15 U.S.C. § 1, a plaintiff must plead facts that show actual injury to competition. It is not enough to allege a reduction of consumer choice or increased prices without demonstrating actual anticompetitive effects.

Michael Brantley, joined by a class of cable and satellite television subscribers, sued NBC Universal, Inc. (“NBC”) and various other television programmers and distributors, alleging violations of 15 U.S.C. § 1, the Sherman Act. Brantley alleged that a vertical agreement between NBC and the other defendants creates a restraint referred to as “tying,” a practice where a seller conditions the sale of one product on the purchase of a different product. Specifically, Brantley asserted that by requiring consumers to purchase multi-channel packages rather than allowing for a la carte programming options, distributors and programmers are limiting competition between one another, “which results in reducing consumer choice, and increasing prices.” The district court granted NBC’s motion to dismiss on the grounds that Brantley failed to allege a recognizable injury to competition, as required by 15 U.S.C. § 1. The Ninth Circuit noted that while tying arrangements may in certain situations harm competitors or preclude entry to the market, they are regularly used to compete in the marketplace and thus are often “consistent with pro-competitive behavior.” Therefore, a successful complaint must allege the tying arrangement caused an “actual adverse effect on competition.” The Court held that NBC’s failure to offer a la carte programming does not state a recognizable injury to competition. Further, an agreement that “has the effect of reducing consumer’s choices or increasing prices to consumers does not sufficiently allege an injury to competition.” Thus, Brantley’s complaint failed to state facts showing an identifiable injury to competition as required by the Sherman Act. AFFIRMED.