Opinion ID: 4542383
Heading Depth: 3
Heading Rank: 3

Heading: Discount Bundling

Text: Next, Inline asserts that the district court misconstrued its discount-bundling claim as a tying claim. The bundle discounts relate to Graphic’s supply agreements with the CPG companies that include both susceptor and paperboard packaging. Inline also asserts that the district court erroneously applied its own economic policy and impermissibly weighed expert testimony to dismiss Inline’s allegations that Graphic’s bundled discounts were a part of Graphic’s anti-competitive scheme. Graphic responds by arguing that “Inline’s antitrust bundling claim fails because there was no evidence Graphic had monopoly/market power in paperboard, which Inline’s own expert admitted was necessary.” Appellee’s Br. at 16. It adds that even if Inline can establish that Graphic had monopoly or market power related to Graphic’s paperboard sales, Inline cannot refute that “Graphic’s prices were above cost.” Id. And, even if Inline can establish Graphic’s monopoly or market power and below-cost pricing, Graphic contends that Inline’s arguments still fall short of demonstrating harm to competition. The Ninth Circuit has defined “[b]undling [a]s the practice of offering, for a single price, [multiple] goods . . . that could be sold separately. A bundled discount -17- occurs when a firm sells a bundle of goods . . . for a lower price than the seller charges for the goods . . . purchased individually.” Cascade Health Sols. v. PeaceHealth, 515 F.3d 883, 894 (9th Cir. 2008). Put differently, a bundled package provides cost savings without coercing one to purchase it. Id. at 900. Conversely, a tying claim requires the plaintiff to prove that a defendant coerced the plaintiff to accept the products and cost savings. Id. We first note that the district court properly viewed Inline’s arguments as a discount-bundling claim. Our circuit has not adopted a standard for determining when discount bundling turns anti-competitive; so, this issue is one of first impression for this court.9 The district court endorsed and applied the Ninth Circuit’s approach, the discount-attribution test. Cascade Health, 515 F.3d at 894–909. In its opposition to Graphic’s summary-judgment motion, Inline applied both the discount-attribution test and the Third Circuit’s LePage’s standard and contended that Graphic’s motion fails under either approach. See LePage’s Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003) (en banc). Upon review, we find it unnecessary to adopt either approach at this time. Both approaches require Inline to establish that Graphic is a monopolist or, at the very least, holds sufficient market power in the relevant or leveraging market. For purposes of Inline’s discount-bundling claim, the relevant or leveraging market is the market for its paperboard sales.10 Inline essentially argues that Graphic’s power in the 9 We did analyze a discount-bundling claim in Southeast Missouri Hospital v. C.R. Bard, Inc., 616 F.3d 888, 889 (8th Cir. 2010), but we later vacated that decision in Southeast Missouri Hospital v. C.R. Bard, Inc., 642 F.3d 608 (8th Cir. 2011). 10 “Antitrust claims often rise or fall on the definition of the relevant [or leveraging] market. The definition of the relevant market has two components—a product market and a geographic market.” Double D Spotting Serv., Inc. v. Supervalu, -18- paperboard-packaging market allows it to offer discounts on bundles of susceptor and paperboard packaging. Such power would enable Graphic to “foreclose portions of the [susceptor] market” to competitors that do not offer both products. LePage’s Inc., 324 F.3d at 155. But Inline has not shown that Graphic holds sufficient monopoly or market power regarding its paperboard sales to avoid summary judgment in Graphic’s favor. See Concord Boat, 207 F.3d at 1060 (“To establish a Section 2 violation, plaintiffs must show that . . . the defendant possessed monopoly power in the relevant market . . . .”). Again, “[m]onopoly power is defined as the power to control prices or exclude competition.” Id. (internal quotation omitted). And “[m]arket power generally is defined as the power of a firm to restrict output and thereby increase the selling price of its goods in the market.” Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215, 1232 (8th Cir. 1987). “Market power may be shown by a firm’s percentage of sales in the market, especially where there is a strong consumer preference for the firm’s product . . . and where there are significant barriers either to the entry of new firms or to increased output by existing firms.” Id. The district court correctly pointed out that Inline’s economic expert, Dr. James Levinsohn, acknowledged that proof of at least some market power in the relevant or leveraging market is needed for Inline’s discount-bundling theory to be viable. Dr. Levinsohn, nonetheless, never ascribed any monopoly or market power to Graphic in the paperboard-packaging market, and Graphic’s monopoly or market power in the susceptor-packaging market does not suffice to show Graphic’s power in the paperboard-packaging market. Graphic also faced intense competition from paperboard-packaging companies such as WestRock Inc., 136 F.3d 554, 560 (8th Cir. 1998) (cleaned up). The evidence does not even show that Inline has truly defined the proper product and geographic components of the paperboard-packaging market. But we will assume that the market has been properly defined. -19- and International Paper. Thus, we affirm the district court’s dismissal of Inline’s discount-bundling claim. Relatedly, we hold that the district court adequately assessed the record and did not abuse its discretion in dismissing Dr. Levinsohn’s untimely market opinion. Given during deposition, his opinion—that Graphic’s accounting margins demonstrated it held sufficient market power in the paperboard-packaging market—came too late. Dr. Levinsohn offered this testimony after the submission of his expert reports without a sufficient justification for the delay. See, e.g., White v. Howmedica, Inc., 490 F.3d 1014, 1016 (8th Cir. 2007) (“We review the district court’s sanction of excluding . . . expert testimony for an abuse of discretion and find none here.” (internal footnote and citation omitted)).