Opinion ID: 618770
Heading Depth: 2
Heading Rank: 2

Heading: Scope of the Resolution

Text: The main dispute in this case is whether the Commission's inquiry, as defined by the Resolution, extends to Church & Dwight's products other than condoms. The Resolution indicates the Commission is investigating various of Church & Dwight's practices, including its conditioning [of] discounts or rebates to retailers on the percentage of shelf or display space dedicated to Trojan brand condoms and other products.... Despite the seemingly unqualified reach of the phrase and other products, the Company argues we should interpret it narrowly to mean and other [condom] products. For its part, the Commission maintains the Resolution comprehends an investigation into Church & Dwight's possible bundling of rebates based upon the retailer's sales of both its condoms and its other products. Under the Commission's interpretation, the information concerning products other than condoms is unquestionably relevant to its investigation, and the district court was correct to enforce the subpoena and the CID. As an initial matter, Church & Dwight is incorrect in claiming the district court failed to interpret the Resolution; the district court simply interpreted the Resolution as being more broad than Church & Dwight had argued. The question properly before us is whether the district court correctly interpreted the Resolution to include an inquiry that implicated Church & Dwight products other than condoms. Contrary to the Company's urging, we defer to the Commission's interpretation of its own Resolution. Cf. FTC v. Ken Roberts Co., 276 F.3d 583, 586 (D.C.Cir.2001) (courts of appeals have consistently deferred to agency determinations of their own investigative authority); EEOC v. Lutheran Social Servs., 186 F.3d 959, 965 (D.C.Cir.1999) (agency's interpretation of relevance of subpoena deserves deference because the scope of the investigation is very much dependent on the agency's interpretation and administration of its authorizing substantive legislation (internal quotation marks, alterations, and citation omitted)). So long as the material the Commission seeks is relevant to the investigation the boundary of which may be defined quite generally, Invention Submission, 965 F.2d at 1090, see also Texaco, 555 F.2d at 874 n. 26 (resolutions of [a broad] sort are not uncommon in the investigative process), the district court must enforce the agency's demand. The Commission maintains its Resolution contemplates an investigation into the possibility Church & Dwight is engaged in exclusionary practices in which products other than condoms may play a role. Such practices include bundling discounts, as in LePage's Inc. v. 3M, 324 F.3d 141 (3d Cir.2003) (en banc), and tying sales, as in Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). Church & Dwight replies that, because the initial clause of the Resolution authorizes an investigation into illegal monopolization in the distribution or sale of condoms ... through potentially exclusionary practices including, but not limited to, [shelf-space discounts] on Trojan brand condoms and other products, the last two words must refer only to Church & Dwight's condom brands other than Trojan. There is, however, a reasonable interpretation of the Resolution that is less narrow than the one Church & Dwight favors. Although we will not interpret the scope of the Resolution so broadly as to enable the agency to investigate a matter beyond the reach of the laws it enforces, see Invention Submission Corp., 965 F.2d at 1089, we note that an inquiry into the bundling of rebates on condoms and other types of products with the purpose of sustaining market power in the market for condoms is arguably within the condemnation of the Sherman Act as the Third Circuit construed it in LePage's, 324 F.3d at 154-57 (concluding 3M's practice of bundling rebates for multiple products in order to maintain its monopoly in one of them was an exclusionary practice in violation of § 2 of the Sherman Act). [] Church & Dwight suggests we should reject this interpretation of the Resolution because the Commission's subpoena and CID are too narrowly focused to support a case premised upon a theory of bundling that includes products other than condoms. The Company reasons the Commission, had it wanted to pursue such a theory, would have requested information on products other than condoms even when that information appears in documents that contain no information on condoms. This argument fails because we do not require the Commission to seek in one document request all the information it might need in order successfully to establish a violation at trial. LePage's is of course not the law of this circuit, and it has been roundly criticized, see, e.g., Antitrust Modernization Comm'n, Report and Recommendations 94 (2007) (The lack of clear standards regarding bundling, as reflected in LePage's v. 3M , may discourage conduct that is procompetitive or competitively neutral and thus may actually harm consumer welfare); Bruce H. Kobayashi, The Law and Economics of Predatory Pricing, in ANTITRUST LAW AND ECONOMICS 116, 148 (Keith N. Hylton ed., 2009) (The potential for liability will result in [firms with sufficient market power and multiple product lines] being deterred from using bundling that would have led to reduced prices for consumers and higher welfare); Richard A. Epstein, Monopoly Dominance or Level Playing Field? The New Antitrust Paradox, 72 U. CHI. L.REV. 49, 71 (2005) (highly unlikely that 3M would tailor practices that cover six of its departments solely because of the effects that it would have on the one product market in which it competed with LePage's); Daniel L. Rubinfeld, 3M's Bundled Rebates: An Economic Perspective, 72 U. CHI. L.REV. 243, 254-56, 262-64 (2005) (by not following test for predatory conduct from Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993), or some similar standard for predatory conduct, LePage's condemns behavior that does not obviously reduce, and may even promote, consumer welfare). We need not, however, pass upon the merits of the rule in LePage's in order to resolve this case. Because LePage's is the law in the Third Circuit, and because Church & Dwight sells both condoms and other consumer products within the Third Circuit, the Commission may lawfully investigate whether the Company's practices would constitute a violation of the law in that circuit. Although this court might someday reach a different resolution of the issue presented in LePage's, a subpoena enforcement action is [generally] not the proper forum in which to litigate disagreements over an agency's authority to pursue an investigation. Unless it is patently clear that an agency lacks the jurisdiction that it seeks to assert, an investigative subpoena will be enforced. Ken Roberts, 276 F.3d at 584. We hold, therefore, the Resolution lawfully encompasses an investigation into whether Church & Dwight has bundled discounts for condoms and other products in order to acquire or maintain a monopoly in the market for condoms in the United States.