Fourth Circuit Affirms Dismissal of Antitrust Claims Against Data Transfer Provider

The US Court of Appeals for the Fourth Circuit affirmed the holding of the lower court, which granted GXS, Inc.’s motion to dismiss plaintiff Loren Data Corporation’s antitrust claims against GXS. Both parties provide electronic data interchange services, which involves the transfer and exchange of business data from one computer system to another. Over the last ten years, Loren Data repeatedly sought a “peer interconnect” data transfer arrangement from GXS (in which each network provider would bear its own cost for data transfers). GXS refused Loren Data’s requests, leading the latter to allege that such refusal constituted a violation of Sections 1 and 2 of the Sherman Antitrust Act. To state a claim under Section 1 of the Sherman Act, a plaintiff must show that a defendant entered into a “contract, combination, or conspiracy” that caused an unreasonable restraint of trade. The Fourth Circuit affirmed the lower court’s dismissal of the Section 1 claim because Loren Data had not adequately pled such a conspiracy or restraint of trade, but only that GXS was unwilling to contract with Loren Data based on Loren Data’s terms. To plead a Section 2 claim, a plaintiff must allege that a defendant has willfully acquired or maintained monopoly power in a relevant market. Loren Data’s Section 2 claims against GXS failed because Loren Data failed to demonstrate that GXS had a specific intent to monopolize. Instead, Loren Data’s allegations established that GXS regularly granted peer interconnects to other network providers, which the court found to be “entirely inconsistent with an intent to monopolize.”

Loren Data Corp. v. GXS, Inc., No. 11-2602 (Dec. 26, 2012).

 

Topics:  Data Transfer Providers, Dismissals, Sherman Act

Published In: Antitrust & Trade Regulation Updates, Civil Procedure Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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