Page 3 - CL

nylj.com |
Commercial Litigation | Monday, august 11, 2014 | 3

Deutsche Bank
long recognized that one such restraint of sion did not plausibly define a relevant “tying
A trusted partner for
commerce is a tying arrangement, whereby product market” (i.e., a market for the Core
servicing Distressed Assets.
one party agrees “to sell one product but Networks) in which Viacom possesses the
only on the condition that the buyer also requisite degree of market power for purposes
Deutsche Bank’s knowledgeable staff, purchases a different (or tied) product, or at of a tying claim.
proprietary systems and its unique least agrees he will not purchase the product In denying Viacom’s motion, Swain held
experience in administering distressed from any other supplier.”5 The roots of the that Cablevision sufficiently alleged the four
assets of a complex nature fills the doctrine date back to at least 1917, where the elements of a per se tying arrangement at
Supreme Court held that the sale of a patented the pleading stage: (1) a tying and tied prod-
void for those clients who need film projector could not be conditioned on uct; (2) evidence of actual coercion by the
assistance in these uncertain times.
From escrow through trustee, paying, its use only with the patentee’s films, since seller that forced the buyer to accept the
settlement or tender agent services, that would have the effect of extending the tied product; (3) sufficient economic power
our dedicated team can support you.
scope of the patent monopoly.6 The “essential in the tying product market to coerce pur-
characteristic of a tying arrangement lies in chaser acceptance of the tied product; and
the seller’s exploitation of its control over (4) the involvement of a “not insubstantial”
the tying product as leverage to force the amount of interstate commerce in the tied
buyer into the purchase of a tied product
market.8 The court disagreed with Viacom
that Cablevision needed to also show “anti-
competitive effects in the tied market” as a

Laron Galea
fifth factor, and instead found that “‘where a
Tel: +1 212 250 2462 [email protected]
The “essential characteristic of tying arrangement may be condemned as ille-
gal per se, plaintiffs need not allege, let alone
www.tss.db.com
a tying arrangement lies in prove, facts addressed to the [anticompetitive
the seller’s exploitation of its effects] element.’”9 The court also noted that,
in any event, Cablevision’s allegations that it
control over the tying product would carry other networks from Viacom’s
competitors if it was not “coerced” into carry-
as leverage to force the buyer
into the purchase of a tied ing Viacom’s Suite Networks sufficed to meet
that fifth element.10
product that the buyer either Swain further found that Cablevision iden-
tified three alternative tying product markets
did not want at all, or may have in which Viacom allegedly maintains sufficient
For more information: www.db.com. This advertisement has been approved and/or communicated by Deutsche Bank Group. Products or services described in this advertisement are provided by Deutsche Bank AG or by its subsidiaries preferred to purchase else- market power: (1) a standalone tying prod-
and/or affiliates in accordance with appropriate local legislation and regulation. Copyright © 2014 Deutsche Bank AG.
uct market for each of the Core Networks;
where on different terms.”
(2) a group market comprised of the Core
Networks based on their combined market

that the buyer either did not want at all, or power; or (3) a programming type market
may have preferred to purchase elsewhere (e.g., Nickelodeon in the “Popular Children’s More Pull for Your Litigation Team
on different terms.”7 A plaintiff can pursue Programming” market, and Comedy Central
a tying claim under either a per se theory, in the “Popular Comedy Programming” mar-
given the “substantial potential for impact on ket).11 Finally, Swain stated that Cablevision
competition” that arises under certain tying sufficiently alleged a “block-booking” claim as
arrangements, or under the rule of reason, well—a subset of tying law in which the sale
which requires a more detailed showing that, of certain rights is contingent on the buyer’s

among other things, anticompetitive effects agreeing to take other rights.12
in the tied market outweigh any procompeti-
tive effects.
‘Brantley’

‘Cablevision v. Viacom’
Cablevision is not the first legal attack on
the channel bundling ecosystem. In Brantley,
Cablevision alleges that Viacom “strong- a purported class of television consumers
armed” it to license several less-popular chan- unsuccessfully sued many of the industry’s
nels (the so-called “Suite Networks”) in order largest programmers (including Viacom)

to gain access to a few in-demand channels and distributors (including Cablevision),
(the so-called “Core Networks”), at the alleged alleging illegal tying in both the upstream
threat of a “10-figure penalty” if Cablevision market (where programmers license chan-
did not license and distribute both the Suite nels to distributors) and the downstream
Networks and Core Networks. In the parlance market (where distributors then sell those
of tying law, the alleged “tying” products are channels to consumers as part of a larger Knowledge of business, finance and accounting are needed at many stages of the
the popular Core Networks, and the alleged grouping, often called a tier).13 The plaintiffs in litigation process. That’s why your accountant should be an integral part of your liti-
“tied” products are the lesser-watched Suite Brantley alleged that the defendant program- gation team. Our Law Firm Services, Business Valuation and Litigation Support Group
Networks. Cablevision further claims that hav- mers enjoy a high degree of market power, can assist you in understanding a case’s complex financial aspects and provide expert

ing to carry the Suite Networks precludes which they purportedly exploit by only offer- witness testimony on a variety of issues. Isn’t it time you made Israeloff, Trattner &
it from seeking out more popular program- ing distributors a bundle of channels. In turn, Co. part of your team?
ming from other content providers given its distributors allegedly impair competition by business, PROFessiOnAL PRACTiCe & LiCense vALuATiOns
bandwidth constraints.
passing these channels along to the consumer
Viacom moved to dismiss, arguing that through pre-packaged tiers of broadcast and MARiTAL disPuTes/enHAnCed eARninGs CAPACiTY
Cablevision failed to plead all of the essential cable channels.
FORensiC ACCOunTinG/eXPeRT TesTiMOnY • eMbezzLeMenT & FRAud AudiTs
elements of a tying claim, including anticom- The Ninth Circuit affirmed the dismissal business LOss/dAMAGe AnALYsis
petitive effects in the tied product market by of plaintiffs’ Third Amended Complaint
bAnKRuPTCY & ReORGAnizATiOn
foreclosing rival sellers from competing in under a rule of reason analysis—which all
that market. The parties strongly disagreed parties agreed applied. Under that more rig-
as to whether a plaintiff proceeding under orous standard, the court found plaintiffs’ Offices in New York City and Garden City
1-8OO-945-O2OO
a per se theory must also plead and prove tying allegations insufficient to state a claim
“anticompetitive effects” resulting from the because the television programmers were Visit us on the web at www.israeloff.com
alleged tie. Viacom also argued that Cablevi-
using their market power to » Page 10

IT13_NYLJ_LitSupportTug_4.75x5.5_final.indd 1
5/24/13 1:25 PM