F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

G O R L I C K D I S T R

I B U T I O N C E

N T E R S , L L C, a W a shing ton limited liability
company , Plaintiff-Appellant
,

v

.

C A R S O U

N D E X H A

U S T S Y S T E M , I

N C ., Defendant
,

and

A L L I E D E X H

A U S T S Y S T E M S , I

N C ., a California corporation,

Defendant-Appellee

. N o. 10-36083

D.C. No. 2:07-cv-01076- RAJ

OPI NI ON

A ppeal from the United States District Court for the W e stern District of W ashing ton Richard A. J ones, District J udg e , Presiding

Arg ued and Submitted October 12, 2011 Resubmitted J une 19, 2012 Seattle, W a shing ton

F iled J uly 19, 20132 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

B e fore: Alex Koz inski, Chief J udg e, Richard A. Paez and J ohnnie B . Rawlinson, * Circuit J udg es.

Per Curiam Opinion; Partial Concurrence and Partial Dissent by J udg e Paez

SUMMARY * *

Antitrust

The panel affirmed the district c ourt’s summary judg ment in an action alleg ing that the defendant
, the plaintiff’s competitor in auto parts markets, violated antitrust laws in the receipt of favorable prices from a manufacturer.

The panel held that the plaintiff did not sh o w that the defendant knowing ly received d iscriminatory prices not justified by saving s to the manufacturer, in violation of the Robinson-Patman Act. T he panel concluded that the p laintiff failed to show that the defendant had actual knowledg e, trade knowledg e, or a duty to inquire w hether the favorable prices it received mig ht be prohibited by the Act.

The panel also held that the plaintiff did not show that the defendant e ntered into a

n ag reement in restraint of trade with the manufacturer, in v iolation of the Sherman Act. Affirming

* J u dg e Raw lin so n w as d raw n as a m em

b er o f th is p an el f

o llo w in g th e d eath o f J u d g e B eezer in March 2 0 1 2.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.3

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

on differ e n t g r ounds from the district court, the p anel h eld that, u nder a rule of reason analy si s , even assuming the defendant and the manufacturer had a n a g reement, the Sherman Act claim f

ailed because the plaintiff p r o d uced no evidence that the vertical restraint actually injured competition.

C o n cu rring in part and dissenting in part, J udg e Paez
wrote that he would a ff

i r m the dismissal of the RobinsonPatman Act c laims. Disag reeing with the majority ’s decision
to reach the merits of the Sherman Act claim, he wrote that he would remand that claim t o the district c ourt for f urther proceeding s, including further development of the record on t h e a lleg ed a

nticompetitive effect of the defendant’s
ag reement with the manufacturer.

COUNSEL

David C. L

undsg aard (arg

ued) a nd Diane M. Mey ers, Graham & Dunn PC, Seattle, W ashing ton, for Plaintiff-Appellant.

Tim o t h y G. L e y

h (arg ued), Randall T. Thomsen a nd Katherine Kennedy
, Danielson H arrig an L ey h & T o llefson L L P, Seattle, W ashing ton, for Defendant-Appellee.

OP INION

PER CURI AM:

Plain tiff Gorlick Distribution Centers a nd defendant Al l i ed Ex h aust Sy stems c ompete fiercely in the auto parts

m a r kets in W ashing ton, Oreg on and California. G orl i c k4 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

believed that Allied was receiving favorable pric e s f rom a manufacturer, a nd thus turned from the marketplace to the
courts. W e must decide w hether All i ed (1) knowing ly received discriminatory prices not justified by saving s to the manufacturer, in violation of the Robinson-Patman Act, and (2) entered an ag reement in r estraint of trade with the manufacturer, in violation of the Sherman Act.

I. Background

Gorlick and Allied d i s tribute aftermarket automotive
p a rts. B oth d eal in products made by Car Sound Ex haus t Sy stem, a muffler and cataly tic converter manufacturer.

Gorlick challeng es the preferential terms that Car Sound alleg edly offered to Allied but not to Gorlick, including free shipping of its product to the Pacific Northwest; lower prices

on merchandise; volume discount prici n g e v en w hen the volume requirements weren’t met; and hig her y ear-end sales rebates. Gorlick alleg es that A llied knew these favorable shipping
, p ricing and rebate terms w ere not justified b y cost differences, in violation of section 2 (f) of the RobinsonPatman Act, 15 U .S. C

. § 1 3(f). 1 Allied doesn’t dispute, for the most p a r t , t h a t it received advantag eous terms. I nstead, Allied arg ues that it didn’t know what pri ce s other distributors received, and therefore couldn’t knowing ly have

r e c e i ved discriminatory p rices. Allied also arg ues that th e preferential terms had valid d efenses under the RobinsonPatman Act.

1 Go rlick ’ s orig in al co m

p lain t also n am ed Car So u n d as a d ef en d an t, b u t Go rlick ev en tu ally

d ism issed

Car So u n d f ro m th e case.5

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

Gorlick further alleg e s that Car S o und’s shipping p olicy

w a s t h e product of an ag reement or conspiracy betwee n Allied and Car Sound in r e s t r aint o f trade, in violation o f section 1 of the Sherman Act, 1 5 U .S.C. § 1. B e cause it incurred shipping
, handling and storag e costs n ot borne b y Allied, Gorlick c laims it had diffi c u l t y matching its competitor’s prices for Car Sound products.

After discovery
, the district court g r a n t ed summary judg ment f

or Allied on all but o ne of the claims. I t h eld that
t h e r e w a s a g e nuine issue as to whether Allied’s r eceipt o f free shipping from Car Sound and k nowledg e that Gorlick had to pay it s o w n shipping costs violated the RobinsonPatman Act. Rather than proceed to trial, Gorlick voluntarily dismissed t h e r emaining claim a n d timely appealed the district court’s g rant of partial summary judg ment for Allied. 2

II. Discussion

W e review de novo the district c ourt’s g rant of a motion for summary judg ment. Go odman v. Staples The Office Superstore, LLC
, 644 F

. 3d 8 17, 822 (9th Cir. 2011 )

. W e must d etermin e , v i ewing the evidence in the lig ht most favorable to the nonmoving party , whether there are any g enuine issues of material fact and whether the district court correctly applied the law. Id.

2 W e o rd ered th e p a r t i e s t o b rief w h eth er Go rlick ’ s d ism issal w ith o u t p rej u d ice v io lated o u

r f i n al j u d g m en t ru le. B ecau se w e detect n o in ten t to

m an ip u late o u r ap p ellate j u risd ictio n , w e’ re satisf ied th at G o rlick ap p eals f ro m a f in al j u d g m en t. S

ee Ja mes v

. Price Stern S lo a n , In c. , 2 83 F.3 d 1 0 6 4 , 1 0 7 0 (9 th

Cir. 2 0 0 2).6 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

A. Robinson-P atm an Act Claim s

The Robinson-Patman Act targ ets “the perceived harm to competition occ asioned by p owerful buy ers” that have “the clout to obtain lower prices for g oods than smaller buy ers could demand.” Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc.
, 546 U.S. 164, 175 ( 2 0 0 6). T h e act prohibits sellers from d iscriminating on price in the sale of like g oods, and thereby reducing competit i o n , unless the price differential can be just i f ied by saving s to the seller. See 15 U.S.C. § 13(a). T h e a c t contains a counterpart provision that makes it u nlawful f

o r buy ers “knowing ly to induce o r receive a discrimination in p r i c e which is p rohibited by this section.” Id. § 13(f).

B u y ers are not liable if they are innocent beneficiaries o f discriminatory

prices. See Automatic Canteen Co. o f A m

. v. FTC
, 346 U.S. 61, 70–71 (1953). Plaintiff thus b ears the burden o f showing that the buy e r knew both that (1) he was receiving a lower p rice than a com p e titor and (2) the seller would have “little likelihood of a d efense” f or offering that price. Id. at 74, 79–80. R e s t ri cting liability to situations where the buy er knowing ly ac c e pted illeg al prices prevents section 2(f) from “putting the buy er at his peril whenever he
eng ag es in price barg aining .” I d. at 73.

The district court assumed that the prices Allied paid were prohibited by the Robinson-Patman A ct. Neve r t h eless, it h eld that Gorlick had n ot raised a g enuine is s u e o f f a ct as to whether A l l i e d h ad the requisite knowledg e under section 2(f). Gorlick appeals, arg uing that th e district court overlooked evidence that Allied had actual knowledg e, trade knowledg e and a d u t y to inquire whether it was r eceiving prohibited prices.7

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

1. Actual K now ledge

Allied was undoubtedly aware of its f a v ored position
among Car Soun d b u y ers. I ts salesmen brag g ed that they

were “buy ing bet t er” than their competition, and internal

memos trumpeted Allied’s superior purchasing discounts. Gorlick also sug g e s t s t hat Allied would have known it was receivin g better prices because it could “reverse eng ineer” wholesale prices from retail prices.

B u t Allied is not liable under section 2(f) unless Gorlick shows Allied knew the prices it received likely did not qualify for a Robinson-Patman Act defense, se e id. at 71, a burden Gorlick fails to meet. G orlick a n d Allied were very different Car Sound customers. Allied made Car Sound its flag ship brand, purchased Car Sound product s i n much hig her volumes a

nd provided pro m o t i o nal services for Car Sound products that Gorlick d id not. A Car S o u n d e x ecutive testified that Allied promoted only Car Sound p r oducts, while Gorlick p ushed products sold by Ca r S ound’s competitors. Even if Allied k

new it received superior prices and discounts, Gorlick presents no evidence that A llied knew these benefits resulted from any

thing other than the sig nificant differences in how the two companies did business.

Gorlick arg ues that, at the summar y judg ment stag e, we must infer that Allied k new it was receiving unfair prices be cause Car Sound offered it b u lk discounts e ven w hen it failed to buy bulk quantities. According to Gorlick, where a seller publishes its prices, any departure f r om the schedule places the buy er on notice that he is r eceiving discriminatory prices. B ut the Robinson-Patman Act doesn’t prohibit buy ers from hag g ling for a better d eal. Id. a t 7 3

. To put a b uy er at risk of liability any time h e asks f or a lower-than-listed price8 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

would do e n o rmous damag e to the “sturdy barg aining betw ee n b u y er and seller for which scope was presumably left” by o ur antitrust laws. I d

. a t 74. The receipt of betterthan-published prices, w ithout more, does not satisfy section 2(f)’s knowledg e requirement.

I n any e vent, Gorlick itself received advantag eous pricing

even when it f

ailed to meet Car Sound’s targ e ts. I n 2004 a nd 2 0 0 6
, G o r lick didn’t buy enoug h product to q ualify for a rebate, b ut Car Sound gave it credit any way

. A Car Sound

ex e c utive testified that his company offe r e d all distributors “trailer p ricing ” even w hen they purchased l ess than a trailer’s worth of p arts. A buy er’s r e c eipt of discounted prices doesn’t run afoul of the act “if all purch as e r s were g iven a n eq ual opportunity to purchase [ at] the less

ex p ensive” price. FLM Collision P a rts, Inc. v. Ford Motor Co.
, 543 F .2d 1019, 1025 (2d Cir. 1976).

Gorlick offered other evidence of Allied’s alleg ed actual knowledg e, none of which r aises a triable issue of fact. I t points to an e-mail in which Car Sound informed Allied that, because of its settlemen t with Gorlick, it would “unfortunately

” h a v e to offer the two compa n i e s the same prices. B ut Gorlick hasn’t ex plained w hy we should a ssume that Alli ed knew what prices its competitor was g etting before the litig ation beg an. Gorlick also introduced a meeting
ag enda showing that A llied was p lanning to ask Car Sound to raise Gorlick’s prices. B ut these pre-meeting notes don’t show that A llied ever followed throug h with the request, nor

are they accompanied by evidence that Car Sound acceded o r even took the request seriously

.9

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

2. Trade Experience K now ledge

Gorlick arg ues that, even if Allied did not actually know it was r eceiving discriminatory prices, its “trade ex perience” would have place d Allied on notice that those prices were prohibited b y the Robinson-Patman Act. Gorlick has two routes to making a prima faci e c a s e of trade knowledg e

. F irst, i t m a

y show that A llied secured “a substantial price differential” while knowing that Car Sound sold its products
to Gorlick in the same quantities, in the same manner a nd “with the same amount of ex ertion.” See Automatic Canteen
, 346 U.S. at 8 0. Second
, i f t h er e were differences in the quantities ordered or manner of sale, G o rlick must demonstrate that Allied knew those differences did n ot justify the price breaks it received. Id.

B e cause Allied a

nd Gorlick were very different customers, only the second test is relevant here. Al l i e d w a s Car Sound’s “number one account” and pu rchased roug hly fifteen times the dollar a mount of product that Gorlick did. Allied a lso developed an electronic o rdering sy stem that reduced errors and stream l i n e d its dealing s with Car Sound. Gorlick hasn’t presented evidence that Allied knew the deals it received were any

thing other tha n a n incentive f or its continued loy alty , much less that Allied had any insig ht into the pricing Ca r S o und o ffered competitors. Car Sound’s
p r e s i d e nt testified that “ w e n ever show the price of o n e company to another.”

Gorlick c ites to In re D & N Auto Parts Co.
, 55 F .T.C. 1279 (1959), but that c a s e c a n be disting uished on its facts. There, the F ederal Trade Commission concluded that a uto parts jobbers who “ w ere successful operators in a hig hly competitive market and knew the facts of life so f a r a s the10 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

automotive parts market was concerned” should have known that t h e ir discounts were u njustified by the v o lume a nd

manner o f their purchases. Id. at 1295. B ut the jobbers there had joined tog ether in membership corporat i o n s to secure discounts and rebat e s b ased, not on the volume of their individual purch a s e s , but on the combined quantities purchased by the g roup. Id. Gorlick hasn’ t e x plained why Allied, which was not part of such an org a n i z ation, should have k nown that the f

a v o r a b le prices it received f rom Car Sound were unwarranted.

3. Duty to Inquire

F inally
, G o rlick arg ues that Allied’s dealing s with Car Sound put i t o n inquiry notice that it was r eceiving discriminatory pri c e s not within a Robinson-Patman A ct defense. Gorlick identifies o n l y one case where w e f ound that a buy e r had a duty to inquire, Fred Meyer, Inc. v. F TC
, 359 F

. 2d 351 (9th Cir. 1966), rev’d on other g r o u n d s , 390 U.S. 341, 358 (1968), b ut t h e r e the buy e r induced the preferential prices and insisted that none of its competitors be offered the same deal. Id. at 365–66.

Gorlic k produced no evidence showing that Allied did
any thing of the sort. Th e c l o s e st it comes is the meeting
ag enda showing that A llied planned to ask Car Sound to raise Gorlick’s prices but, as discussed above, there is no evidence that Allied followed throug h or that Car Sound acquiesced. Holding that A llied had a duty to inquir e into the prices offered to its c ompetitors would drastically ex pand the scope of that duty , and we decline to do so here.

I n sum, we affirm the g rant of summary judg ment because Gorl ick fails to show that Allied had actual11

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

. knowledg e, trade knowledg e or a duty to inquire whether the favo r a b le prices it received mig ht be prohibited by the Robinson-Patman Act.

B. Sherm an Act Claim

S ection 1 of the Sherman A ct proscribes contracts , combinations or c onspiracies t h a t u n r easonably restrain trade. 15 U.S.C. § 1; State Oil Co. v. Khan , 522 U.S. 3, 10 (1997). W e test the leg ality of a r estraint under the r u l e of reason, asking whether it “is such as merely re gulates and perhaps thereby promotes compet i t i o n or whether it is such a s may suppress or even destroy competition.” FTC v

. I ndi ana Fed’n o f Dentists
, 4 76 U.S. 447, 458 (1986). To sustain a section 1 claim under the rule of reason, a plaintiff must show (1) the parties to the a g reement intend to h a rm o r restrain competition, (2) the ag reement actually i njures competition and (3) “ the restraint is unr easonable as determined b y balancing the restraint and any justifi c ations o r procompetitive effects o f the restrai n t

. ” Cal. Dental A ss’n v. FTC , 224 F .3d 942, 947 (9th Cir. 2000).

Gorlick claims that A llied a nd Car Sound tog ether devised a shipping policy that violated section 1. Car Sound woul d s h i p its products to Allied’s facilities in the Pacific Northwest with o u t charg e b ut refused to ship to Gorlick outside of California, even if Gorlick p aid the shipping costs. Gorlick worked around t h e refusal by having Car Sound products delivered to its California warehouses a nd transporting the g oods to the Northwest at its own ex pense.

The district court rej e c t ed Gorlick’s section 1 c laim, concluding that the evidence, viewed in the lig ht most fa v o rable to G orlick, f

ailed to establish that Allied and Car12 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

Sound acted in concert to limit Gorlick’s access to Car Sound products in the Pacific Northwest. Even if the evidence established that Car Sound refused to ship to Gorlick outside of California, the d i s t ri c t court wasn’t persuaded that Car S o u nd made this decision “ at A llied’s behest.” I n t h e alternative, it held the Sherman Act claim time-barred.

W e a ffirm, but o n d i f

fe rent g r ounds. See Rano v

. Sipa Press, In c

. , 987 F .2d 580, 5 84 ( 9 th Cir. 1 993). Even

assu ming that Allied and Car Sound h ad an ag reement, the Sherman A ct c l a im f

ails because Gorlick produced no evidence that the vertical restraint actually injured competition. See Cal. Dental Ass’n , 224 F .3d at 947.

1. Anticom petitive ef

f ects

Gorlick complains that the alleg ed Allie d

– C a r Sound
ag reement handicapped its ability to sell Car Sound products
at competitive prices. B ut the antitru s t l aws “ were enacted for the protec t i o n of competition
, not competitors

. ” Brunswick Corp. v. Pueblo B owl-O-Mat, Inc.
, 429 U.S. 477, 488 ( 1977) (internal q

uotation marks omitted). G o rlick must demonstrate injury to co m petition in the market as a whole,
not merely injury to itself as a competitor. See Brantley v. NBC Universal, Inc.
, 6 75 F .3d 1 192, 1200 (9th Cir. 2 012); McDaniel v. Appraisal Inst.
, 117 F .3d 421, 423 (9th C ir. 1997); Zoslaw v. MCA Distrib. Corp.
, 693 F .2d 870, 887 (9th Cir. 1982).

Gorlick tries to translate its individual harm into harm to competition by rely ing o n the concentrated nature of the market. As it notes, G orlick and Allied tog ether account for

s e v e nty percent o f the market in parts of Oreg on a nd W a shing ton. B ecause Gorlick is Allied’s main r ival, Gorlick13

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

arg ues that any

thing that hobbles its own b usiness g ives Allied increased market power and hurts competition overall.

This theory of anticompetitive harm mig ht be plausible if

we w ere looking only

at the market for Car Sound p roducts. B ut, as Gorlick concedes, the relevant market is “the market for aftermarket automotive ex haust products provided throug h traditional warehouse distributors.” A number o f other manufacturers, in cluding CATCO, Eastern, W alker, F lowmaster, J ones Ex haust, Schultz a nd the I nternational Muffler Company
, se r

v e t h i s m a r k e t and provide substitutable products.

I t doesn’t matter whether Car Sound’s products are f ully interchang e able with those of its competitors because perfect fung ib i l ity isn’t required. United States v. E.I. du Pont de Nemours & Co.
, 351 U.S. 377, 394 (1956). I f it were, “only phy sically identical products w ould be a part of the market.” Id. I nstead, products must be r e a s onably interchang eable, such that there is cross-elasticity o f demand. Brown Shoe Co.

v. United States , 370 U.S. 294, 325 (1962).

Nothing in the record sug g ests that the price A l l ied charg ed for Car Sound products was insensitive to the prices charg ed for competing produ c t s

. That companies make a

s ig nificant investment in new product lines isn’t surprisi n g, and it’s certainly not probative of whether products a re sensiti v e t o p rice competition. And even if Allied charg e s hig her prices than Gorlick for Car Sound products, that say s nothing about how competitive Car S o und’s products were vis-a-vis other brands. I n short, Gorlick fails to show h ow the alleg ed Allied–Car Sound pact dampens competition a mong these interchang eable brands, several of which it sells. Absent an alleg ation that Car Sound was the only
, or even the14 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

. dominant, br and of a

utomotive ex haust parts, the supposed

arra n ge m ent between Car Sound and Allied doesn’t affect competition in the relevant market.

So long as other manufacturers compete with Car Sound, which they do, and Gorlick sells those other brands, which it does, vibra n t interbrand competition will act as a check on any intrabrand advantag e that A lli ed may receive on Car Sound products. I f Allied tries to c harg e monopoly prices on Car Sound parts, consumers will simply s witch to the other brands. Nothing in the alleg ed Allied–Car Sound ag reement affects G orlick’s ability to sell competing products. I n fact, Gorlick was the principal d istributor for CATCO, Car Sound’s m ain competitor, and had ex clusive arrang ements with at least two other suppliers.

Perhaps recog niz ing that the record supports the ex istence of strong interbrand c ompetition, Gorlick focuses instead on intrabrand competition among Car Sound distributors. B ut it is interbrand c ompetition that i s “ t h e primary concern o f antitrust law.” Continental T. V., Inc. v. GTE Sylvania Inc.
, 433 U.S. 3 6, 52 n.19 ( 1977). Gorlick claims that a reduction in interbrand competition isn’t required wh e r e there’s a concentrated market, but the only case it cite s f o r this
prop o s ition is an out-of-circuit district court decision from 1988.

The Supreme Court has recog niz ed that vertical restraints

on intrabrand competition can actually p r omote interbrand

c ompetition and are therefore consistent with a competitive market. See Leegin C

reative Leather Prods., Inc. v. PSKS, Inc.
, 551 U.S. 877, 889–92 (2007). I n that c ase, a le a ther belts manufacturer refused to sell its products to retailers that discounted below a certain price. I d. a t 883. The Court h eld15

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

that such vertical price restraints are not a per se violation o f section 1, because, among other procompetitive effects, they help protect investments in customer service. Id. a t 890–91, 907. A manufacturer mig ht w ish r etailers to a d v e rtise its products, conduct demonstrations or hire knowledge a ble employ e es. Id. at 890–91. I n the absence of a price restraint,

a discounti n g r etailer that provides no such services mig ht undercut a competit o r t hat has spent resources g e nerating demand f o r the manufacturer’s product. Id. This free-riding could ultimately

hurt consumers:

I f the consumer can

. . . buy the product from

a retailer that d iscounts bec a u s e it has not spent c apital providing services o r developing

a quality reputation, the hig h-service retailer will lose sales to t h e discounter, forcing it to

c u t back its services to a level lower t h a n consumers would otherwise prefer.

Id. at 891.

Allied provided just these sorts o f benefits to Car Sound. B efore Allied beg a

n selling Car Sound’s products in th e Pacific Northwest, Car Sound had no p resence in the reg ion. Allied built brand recog nition f or t h e c ompany by h osting seminars for muffler shops and mak i n g s ales calls— “missionary work,” as A llied called it—along side Car Sound employ e es. Gorlick, o n t h e other hand, ag g ressively drove down the price for Car Sound p r o d u c ts. H ad Car Sound

ex tended it free shipping
, Gorlick mig ht have undercut Allied’s investment in the p roduct line. F ar from hampering

c o m petition, the alleg ed vertical restraint helped ensure that Allied would c ont i n u e p romoting Car Sound parts, so they could compete effectively ag ainst products offer ed b y other16 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

manufacturers. See Continental T. V.
, 433 U.S. at 54–55; 8 Phillip E. Areeda & Herbert Hovenkamp, A ntitrust Law ch. 16A–3, at 136–42 (3d ed. 2010).

I n sum, Gorlick has n ’ t provided a plausible ex planation for how the alleg ed ag reement between a manufact u r e r a nd

a distributor, concerning a p r o d u ct line without market dominance, causes harm to c o m p etition in the entire automotive ex haust product market. While Gorlick may be unha p p y t h a t Allied g o t a b etter deal, it can’t turn its individual g rievance into a g eneral claim of harm to competition. F urthermore, i t s alleg ation of market concentration isn’t p roof o f a n t i c o m p e titive harm because Car Sound’s competitors, whose products G orlick c ontinues to sell, act as a check on Allied’s ability to in c r e ase prices across the board.

2. Issue F airly Raised Below

Gorlick protests that the r e c ord on a n ticompetitive effects is undeveloped and that it would be prejudiced if we affirmed the district court on that g round. B ut the parties discussed the anticompetitive effect of the alleg ed Allied–Car Sound
ag reement in supple m e n t a l briefs before the district court. Gorlick had a c hance to present its side of the arg ument, a nd

even included ex pert economic testimony

. F urthermore, the parties c onducted supplemental b riefing f o l lowing oral
arg ument before us. T h e re’s no indication of what more Gorlick would prove if it had another opportunity

. Sending thi s i s s u e back to the district court would be a waste of time and judicial resourc e s

. There are no disputed material f

acts. E v en assuming that a vertical ag reement

ex i s ted and that it affected the price of Car Sound p roducts,17

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

there’s no plausible showing o f harm to competiti o n i n the market for automotive ex haust p r oducts as a whole. Gorlick loses as a matter of law.

* * *

F avorable prices th a t improve one distributor’s

c o m p e titive position do n ot necessarily violate the antitrust laws. Here, Gorlick hasn’t shown that Allied knew the price advantag es it received resulted from any factor other than its larg e volume of purchases and enthusias t i c salesmanship o f Car Sound products. Nor h as G orlick demonstrated that any alleg ed ag reement between Allied and Car Sound stif led competition in the market fo r a ftermarket auto parts as a whole. W e must return this capital i s t rumble to the forum where it belong s: the market.

AF F IRMED.

PAEZ
, Circuit J udg e, concurring in part and diss e n ting in part:

I join Parts I and I I .A o f the majority opinion and would affirm the dismiss a l o f Gorlick’s Robinson-Patman A ct claims. B ut I cannot ag ree w ith the ma j o r i t y ’ s d ecision to reach the merits o f Gorlick’s Sherman Act claim. I would remand that claim to the district court for further proceeding s, including further development of th e r e cord on the alleg ed anticompetitive effect of Allied’s ag reement with Car Sound. The district c ourt would then be in t h e b e st position, assuming there are no g enuine factual disput e s, to apply the rule of reason analy sis.18 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

“I n the absence of g enuine issues of material fact, we may affirm the district court’s summary judg ment on any g r ound supported by the record
, r e g ardless of whether the district
court relied upon, rejected, or e ven c onsidered that g round, if the movant is entitled to judg ment as a matter of law.” In re ATM Fee Antitrust Litig.
, 686 F .3d 741, 748 (9th Cir. 2 012) (internal citations and quotations omit t e d )

. Here, while the

m a j o r i t y ’s a naly sis may ultimately be correct, I do not think the thin record in this case supports such a determination.

The maj o r ity recog niz es that Gorlick’s theory o f anticompetitive harm—wh i c h was not the basis for A llied’s motion for summary judg ment—“mig ht be plausible,” e x cept that the majority seems to assume that aftermarket automobile e x haust parts are fung ible and thus that “vibran t interbrand competition w ill act a s a check on any intrabrand advantag e that Allied may re c e ive on Car Sound.” The record, however, d oes not suppor t t h e conclusion that such products are “substitutable” or “interchang eable.” The record only provides oblique and ou t

- o f-contex t hints that aftermarket auto ex haust parts a re so f u ng ible. The only evidence supporting such a n inference comes from a deposition of Allied manag er L awrence Contreras. W hile testify ing that he c o u l d infer his competitors’ prices from Allied’s profit marg ins, the following ex chang e took place:

Q: W h en y ou say “they ,” who is buy ing at the same rate as y

ou?

A: Any one that would have the same like product, not necessarily

same brand.

Q: Same like product?19

G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

.

A: L ike product, not brand name.

Q: So like — let’s take Walker v e r sus Mag n aF low [ Car S o u nd]

. I s there a W alker product that is like a Mag naF low product —

A: Yes.

Q: — in the contex t that y ou just used?

A: Yes.

Q: W h at w ould that b e? Give me an ex a mple.

A: Mufflers, cataly

tic converters, tubing
, p a

rts and accessories. They ’re all pretty close.

The other hints in the r ecord are passing references in depositions d iscussing the orig ins of t h e a f termarket market (“ C a t a l y tic converters were just being developed as a replacement part on a car. Prior to that they were — had to be purchased from the car dealer.”), and the ex istence of several competitors manufacturing cataly tic converters. I

n my view, this evidence does not conclusively establish that aftermarket cataly tic c onverters are f

ully interchang eable products such that v i brant intrabrand competition can be a ssumed, particularly in lig ht o f other sug g estions in the r e cord that in d ividual brands may be disting uishable. F or ex ample, a former Gorlick General Manag e r t estified about the “investment” companies make in “ shepherding [ a new] line” of a particular p r o d uct, sug g e sting that c ustomers may sy stematically prefer one brand over another

. Moreover, Gorlick did p r esent some evidence that the market was sensitive to competition for distrib u t i o n of Car Sound20 G O R L I C K D I S T R I B

. C T R S

. V

. C A R S O U N D E X H A U S T S Y S

. products. Gorlick’s e x pert opined that there was a likelihood of anticompetitive e f

fects f ro m the alleg edly wrong f ul
ag reement between Allied and Car Sound. O ne of several factors the ex pert r elied on was a muffler retailer’s statement bemoaning Car Sound’s d ecision to prevent Gorlick from selling Car So u n d products in his a rea because the retailer “relie[ d] on G orlick’s to g et a fair price” on Carsound
p r o d u cts. The ex pert a lso opined that Allied was able t o maintain monopoly prices w hile the alleg ed illeg al ag reement

was in effect. I f interbrand competition was as robust as the majority presumes, Allied w o u l d have been u n likely to

s u s t ain hig her prices on Car Sound products—and muffle r shops would be indifferent to Gorlick’s ability to s e l l Car Sound products.

Even assuming
, arguendo
, that the anticompetitive issue

was fairly p resented bel o w, I do not see h ow Allied can prevail on summary judg ment o n this record, p a rticularly when we must consider what litt l e e v i dence there is in the lig ht most favorable to Gorlick. Goodman v. Staples The Office Superstore, LLC
, 644 F. 3 d 8 17, 822 (9th Cir. 2011). Althoug h w e invited supp lemental briefing on the anticompetitive effects issue, I a m not persuaded that we should ex ercise our discretion to reach the merits of Gorlick’s Sherman Act claim. B ecause of the way Allied’s summary judgm en t motion evolved in the district court, the issue was not thoroug hly developed there, a n d I am reluctant to resolve th i s claim on the merits when it w as never the b asis for Allied’s summary judg ment motion. According ly
, I would remand the Sherman A ct claim to the district court for f urther proceeding s.