2 Local Cellular Firms Settle Price-Fixing Suit
Southern California’s two major cellular phone companies settled a 4-year-old price-fixing lawsuit Thursday with an agreement to provide customers up to $165 million in discounts on services and accessories.
The tentative settlement, hashed out in Orange County Superior Court late Wednesday, affects LA Cellular, AirTouch Cellular and their customers in Orange, Los Angeles, Riverside and San Bernardino counties.
The discounts work out to an average of $165 per customer for the approximately 1 million cellular customers in the four counties--but are not expected to cost the phone companies that much because many customers won’t avail themselves of the settlement. In many cases, former cellular users would have to reactivate service and start spending hundreds of dollars a year before they could take advantage of any of the discounts.
The two phone companies continue to deny that they engaged in a price-fixing conspiracy and said through representatives Thursday that they settled to limit mounting legal fees.
Although all details have yet to be worked out, Irvine-based AirTouch is to provide its customers from 1984 to the present with certain amounts of free phone time and to waive reactivation fees for those who have dropped the service and want back in. Maximum value of the settlement package for AirTouch is $90 million, spokeswoman Melissa May said.
LA Cellular spokesman Steve Crosby said the Cerritos-based company will provide customers from 1987 to 1993 with reactivation waivers and discounts on phone time and on accessories. Maximum value of LA Cellular’s share of the settlement is $75 million.
The lawsuit was filed in 1993 by Anaheim entrepreneur Arthur Garabedian, owner of Western Mobile Telephone Co. and a pioneer in the mobile telephone business.
He says the two firms systematically overcharged customers for years and that key managers of LA Cellular and AirTouch--originally called PacTel Cellular--met in 1987 and agreed not to compete on pricing.
