TENTH CIRCUIT NOTES ECONOMIC RATIONALITY OF GROUP BOYCOTT THEORY; INSTRUCTS DISTRICT COURT TO RECONSIDER ITS GRANT OF SUMMARY JUDGMENT
In Champagne Metals v. Ken Mac Metals, Inc., Nos. 04-6222 and 05-6139 (10th Cir. 2006), plaintiff aluminum distributor, a recent entrant in the aluminum distribution market, alleged that competing aluminum distributors engaged in a conspiracy to withhold business from any aluminum mill that supplied the plaintiff in order to force the plaintiff out of business and deter others from entering the aluminum distribution market in violation of Section 1 of the Sherman Act. The Western District of Oklahoma granted the defendants' motion for summary judgment, holding that plaintiff's proffered evidence of conspiracy was insufficient. According to the district court, the plaintiff did not offer direct evidence of a conspiracy and, applying the principle that the range of permissible inferences from circumstantial evidence of a conspiracy is limited where the economic rationality of the alleged conspiracy is doubtful, the district court found plaintiff's circumstantial evidence of conspiracy insufficient to save it from summary judgment because the economic theory of the plaintiff's claim made little economic sense. On appeal, the Tenth Circuit reversed. It held that the plaintiff had produced direct evidence of conspiracy, though that evidence was not by itself sufficient to overcome a summary judgment motion, and that the district court erred in finding that the plaintiff's economic theory was dubious and consequently undervalued the plaintiff's circumstantial evidence of conspiracy.
Continue Reading...SIXTH CIRCUIT REINSTATES MONOPOLIZATION CLAIM AGAINST 3M BASED ON EXCLUSIVE DEALING CONTRACTS
It appears that the 3M Company has another exclusive dealing problem based on allegedly anti-competitive unilateral conduct, which in the current antitrust environment is significant news. The appropriate boundaries of unilateral anticompetitive activity have been a subject of intense interest in the antitrust bar since the Supreme Court's decision in Verizon Communs., Inc. v. Law Offices of Curtis V. Trinko, 40 U.S. 398 (2004). Trinko is typically characterized as reflecting increasing judicial skepticism with most antitrust theories attacking unilateral actions by an alleged monopolist. This skepticism has arguably complicated Section 2 monopolization and attempted monopolization cases, and resulted in such cases increasingly being resolved against plaintiffs at the early stages of litigation, particularly when brought by other competitors. However, and seen as bucking the overall trend, in 2003 the Third Circuit upheld a monopolization verdict against 3M arising in large part out of exclusive dealing arrangements which 3M had made with major sellers of clear tape in a case brought by a competitor. See LePage's Inc. v. 3M, 324 F.3d 141 (3rd Cir. 2003). It now appears that 3M, at least at the pleading stage, has been unsuccessful in another Section 2 monopolization claim brought by a competitor because of exclusive distribution arrangements with distributors, this time for retail automotive coated abrasives like sandpaper and polishing and grinding disks. NicSand Inc. v. 3M Company, 05-3431 (6th Cir. 2006) (filed August 8, 2006) ("NicSand").
Continue Reading...DEEP DISCOUNTS! NO PRICE DISCRIMINATION! (OR, IF YOU PREFER) SEVENTH CIRCUIT UPHOLDS PRICE DISCRIMINATION VERDICT
In an opinion that sheds light on the defenses available to a company accused of price discrimination, the Seventh Circuit Court of Appeals has upheld a jury's defense verdict in favor of tobacco giant R.J. Reynolds Tobacco Co. ("Reynolds"). R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, 2006 U.S. App. LEXIS 21590 (7th Cir. Aug. 24, 2006), reh'g denied, 2006 U.S. App. LEXIS 23811 (7th Cir. Sept. 15, 2006). Specifically, the unanimous panel: (1) allowed Reynolds protection under the "general availability" defense even though its generally available discount was conditioned on the retailer's agreement to provide a certain level of advertising; (2) remarked that evidence of intent in a Robinson-Patman Act trial could only serve to confuse the jury; and (3) held that a generally available discount can qualify for a "meeting competition" defense, if it counters a similar discount from a competitor.
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