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Cellphone users seeking to switch service providers have long faced a frustrating expense: Their old phones become useless as many of the largest wireless companies require customers to use specific makes of phones. In April 2002, several wireless customers filed suit in federal court, alleging that the wireless companies’ practice of requiring customers to purchase specific phones constituted an unlawful “tying” arrangement, in violation of the Sherman Act. U.S. Judge Denise Cote of New York’s southern district dismissed the case last week, granting the summary judgment motion filed by T-Mobile, Sprint Spectrum, Cingular Wireless, Verizon Wireless and AT&T Wireless Services, among others. “[T]o show anticompetitive effects in the handset market from a defendant’s practice of tying the sale of service to the purchase of a locked handset, the plaintiffs must show that an individual defendant’s practice has injured a company competing in the handset market, created barriers to entry into that market or otherwise injured competition in the tied product market,” Cote wrote in In re Wireless Telephone Services Antitrust Litigation, 02 Civ. 2637. “They have not done so,” she concluded. Wireless service providers sell their services and phones as a package, subsidizing the cost of the phone to coax users into the market, according to Cote’s decision. The plaintiffs allege that the defendant phone companies “tied” or “locked” the phones into use for their respective networks, in order to prevent customers from switching networks.

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