Appeals Court Rules Against L.A. Cellular

Four cellular phone companies will get a second chance to prove in court that Cerritos-based Los Angeles Cellular Telephone used unfair competitive practices in its efforts to win subscribers from rival AirTouch Communications. Cel-Tech Communications, Comtech, Cellular Service and Nutek sued L.A. Cellular in 1994 because it was selling cell phones below cost. A trial court ruled that L.A. Cellular acted fairly in marketing the phones as loss leaders because its aim was to compete against San Francisco-based AirTouch, not to drive the four other firms out of business. But the state Court of Appeals ruled this week that the loss-leader strategy could constitute unfair competition because the practice is “subsidized by its duopoly profits.” L.A. Cellular and AirTouch are the two companies with federal licenses to provide cellular service in Los Angeles. The issue will now be decided in Los Angeles County Superior Court.