To provide service to consumers, cable companies must typically execute contracts, known as franchise agreements, with local municipalities authorizing the companies to run cable wires and other infrastructure over public rights-of-way. The plaintiffs claimed that, from 1999 to the present, Comcast engaged in a strategy of clustering, a practice by which it either purchased competitors’ franchise agreements in the Philadelphia DMA or swapped those agreements for ones in other parts of the country. That clustering allegedly increased Comcast’s market share in the Philadelphia region from 24 percent in 1998 to 70 percent in 2007. Plaintiffs claimed that Comcast violated Sections 1 and 2 of the Sherman Act by conspiring with competitors to leverage this market share to raise prices and deter other cable providers, known as overbuilders, from entering the Philadelphia market.
Section 1 of the Sherman Act prohibits competitors from entering agreements that have an adverse effect on competition, while Section 2 proscribes abuses of monopoly power or acquisition of a monopoly through anti-competitive means.
