Metaswitch files federal antitrust lawsuit against Ribbon Communications
Nov 19, 2018
Alleges Ribbon Illegally Using Dominant Market Position in Order to Raise Prices for Network Operators
Claims Ribbon’s Anticompetitive Conduct Impedes Access to Desperately Needed Modern Communications Services for Millions of Americans
SAN FRANCISCO, November 19, 2018 – Metaswitch Networks (“Metaswitch”) today announced that it has filed an antitrust action that could help ensure that tens of millions of Americans have access to cost effective and reliable upgrades of their fixed-line telephone networks. The wide-ranging lawsuit was brought in the United States District Court for the Southern District of New York against Ribbon Communications, Inc.1 (“Ribbon”) (NASDAQ: RBBN). JP Morgan (NYSE: JPM) directly or indirectly owns approximately 48% of the outstanding shares of Ribbon and has the right to designate five of Ribbon’s eight current directors according to Ribbon’s most recent proxy filing. Current Ribbon President, Chief Executive Officer and director, Franklin “Fritz” Hobbs, currently serves as a Senior Advisor at One Equity Partners, JPM’s former private equity unit.
Many U.S. and Canadian communities, especially those that are rural, currently rely on land-line telephone networks that need modernization in order to ensure the continuity of reliable service, including for critical emergency calls to police, fire departments and 911, as well as enable high-speed internet access. Metaswitch is Ribbon’s only significant remaining competitor in the U.S. and Canada that competes to transform and modernize these land-line telephone networks for the use of voice over internet protocol (“VoIP”). The lawsuit alleges that Ribbon has aggressively consolidated the industry through serial acquisitions and is illegally using exclusionary and deceptive tactics to eliminate its last major competitor in the market.
Martin Lund, Metaswitch Chief Executive Officer stated, “This litigation seeks to ensure Americans’ access to desperately needed land-line network upgrades, particularly in rural areas where cellular service can be less reliable. If left unchecked, Ribbon will be free to raise prices for more than 700 local network operators who will have no choice but to either slow down much-needed upgrades or to pass on the impact of increased costs to consumers.”
The complaint alleges that after Metaswitch refused to be acquired by Ribbon in 2013, Ribbon launched an anticompetitive campaign to “kill Metaswitch”, including by asserting certain intellectual property rights in bad faith and in contravention of royalty-free licensing obligations, systematically maligning Metaswitch to customers with false and misleading information, and coercing customers to choose Ribbon instead of Metaswitch with anticompetitive pricing practices, among other things.
Lund added, “Blatant efforts to dominate a captive market and price gouge are exactly what the antitrust laws are designed to stop. We are pursuing this case not just to protect Metaswitch, but because we believe Ribbon’s conduct is hindering customers’ ability to make fixed-line upgrades that could enhance the day-to-day lives of millions.”
The federal antitrust action is seeking treble damages from Ribbon for alleged violations of the Sherman Act, damages under the Lanham Act and various state statutes, as well as permanent injunctive relief seeking to prevent Ribbon from continuing its unlawful conduct. Metaswitch is requesting a jury trial and also seeking pre- and post-judgment interest and reimbursement of Metaswitch’s costs and expenses and attorneys’ fees.
For additional information, please visit www.metaswitch.com/antitrust.
- Ribbon Communications, Inc. is a newly combined entity formed by the merger of GENBAND Holdings Company, Sonus Networks, Inc., and various holding companies. “Ribbon” when used in this press release, refers to Ribbon Communications plus any of its predecessor entities included but not limited to Genband and Sonus.
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